Average collection period is a measurement of the number of days the firm takes to collect money owed.
Average Collection Period = (Accounts Receivables / Sales) x 365
- Accounting Tools – Average Collection Period – An explanation of the average collection period, how it is calculated, and how it can be reduced.
- Investopedia – Average Collection Period – Average collection period and how it compares with accounts receivable turnover.
- The Balance SMB – What is the average collection period ratio? – What average collection ratio is and how it is used.