Receivables Dilution Calculator
Calculate receivables dilution, net collectible value and 100% less dilution. Compare that simple ceiling with your current advance rate.
How dilution works
Dilution reduces the amount of receivables that turns into cash. This calculator subtracts the dilution percentage from 100% as a simple ceiling. That does not establish a safe advance rate: reserves, collection risk, other ineligibles and the lender’s agreement also matter.
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Frequently asked questions
What is receivables dilution?
Dilution is the gap between the face value of receivables and what is actually collected, caused by credit memos, returns, allowances, discounts, short-pays, and other non-cash reductions. Expressed as a percentage of gross sales or gross receivables, it measures how much of the billed amount never turns into cash.
How is the dilution rate calculated?
Divide total dilutive items (credit memos, returns, discounts, short-pays, and other non-cash credits) by gross credit sales for the same period, then multiply by 100. For example, $50,000 of dilutive items on $1,000,000 of gross sales is a 5% dilution rate.
How does dilution affect the advance rate?
Dilution reduces the amount of receivables that turns into cash. This calculator subtracts the dilution percentage from 100% as a simple ceiling. That does not establish a safe advance rate: reserves, collection risk, other ineligibles and the lender’s agreement also matter.
Why do lenders monitor dilution continuously?
Dilution moves as credit memos and short-pays accumulate, and a rising trend erodes collateral value between borrowing-base certificates. Tracking it continuously, rather than at month-end, lets a lender adjust the advance rate or reserves before the borrowing base is overstated.
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