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Average Collection Period

Calculate average time to collect receivables.

Average Collection Period Calculator - Collection Time Analysis

Average Collection Period Calculator

Calculate the average time it takes to collect accounts receivable and analyze your company's collection efficiency

Collection Period Calculator

Enter your receivables and sales data to calculate average collection period

Financial Data

$

(Beginning + Ending) ÷ 2

$

Collection Period Analysis

Receivables Turnover
Average Collection Period
Daily Sales
Collection Efficiency

Industry Benchmark Analysis

≤ 30 days
Excellent
Very efficient collection
31-60 days
Good
Industry average
> 60 days
Needs Improvement
Collection issues

Improvement Recommendations

Collection Process

  • • Implement automated invoice reminders
  • • Establish clear payment terms
  • • Review credit approval process
  • • Consider early payment discounts

Urgent Actions

  • • Review aging accounts receivable
  • • Strengthen collection procedures
  • • Consider factoring receivables
  • • Tighten credit policies

Maintain Excellence

  • • Continue current collection practices
  • • Monitor for any deterioration
  • • Consider expanding credit terms
  • • Benchmark against competitors

Cash Flow Impact

  • • Faster collection improves cash flow
  • • Reduces financing costs
  • • Lower bad debt risk
  • • Better working capital management

Understanding Average Collection Period

Formula

Average Collection Period =
Average Accounts Receivable
────────────────────────
Daily Credit Sales
Where Daily Sales = Annual Credit Sales ÷ Period Days

Alternative Formula

ACP = Period Days ÷ Receivables Turnover

Key Insights

  • Measures efficiency in collecting receivables
  • Lower periods indicate faster collection
  • Should be compared to payment terms
  • Helps assess credit and collection policies
  • Important for cash flow management

Example Calculations

Example 1: Good Collection

Average Receivables: $50,000
Annual Credit Sales: $600,000
Daily Sales: $1,644
Collection Period: 30.4 days

Example 2: Needs Improvement

Average Receivables: $120,000
Annual Credit Sales: $600,000
Daily Sales: $1,644
Collection Period: 73.0 days
v1.0.0.758733

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v1.0.0.758733