How to Calculate Gross Credit

Unlike net credit sales, gross credit is the amount of money your business takes in before deducting returns and allowances. Credit sales are invoiced orders, where you do not receive money upfront. Payments on credit commonly arrive a month or more after fulfillment. Looking at gross credit sales is one simple way to get an idea of the amount of credit you're extending to customers.

Instructions

1. Determine the total gross revenues earned during the period from all sources. This includes all phone, in-person, Internet and invoice orders received. Do not deduct returns requests fulfilled and allowances (such as special rebates) that you've extended during the period.

2. Subtract total cash receipts for the period from your total gross revenues. You can find this information in your cash register summary or by looking at your merchant account statement for credit card orders. The order date should match the "payment in full" date to count as a cash sale.

3. Review the result, which is gross credit sales. Compare this final result with your individual invoicing records for the period if necessary to verify accuracy.

Tips & Warnings

• Keep track of your sales (cash and credit) in an accounting software program to make this process simpler in the future.

References

• Accounting Tools; What Are Net Credit Sales?; August 2010
• Financial Times Lexicon: Credit Sale