Average Collection Period Calculator | Sample Business Plan

Average Collection Period Calculator

Days in a year:  

Receivables Turnover:  

Average Collection Period =  

To calculate Receivables Turnover click here

Average Collection Period Formula

Average Collection Period =

Days in a year / Receivables Turnover

while Receivables Turnover is calculated by the following:

Receivables Turnover =

Net Credit Sales / Average Account Receivables

What is Average Collection Period?

Average collection period is used to determine how long it takes for a company to receive payment on goods sold. A shorter collection period is a good sign that the company is doing business with people that are good about paying their bills, a long collection period is a bad sign; keeping in mind the company also has input in this as it may give different terms (i.e. it may give customers 30,60, or even 90 days to pay).