Average Collection Period

The Average Collection Period calculator computes the average number of days between credit sales and collection of funds.

INSTRUCTIONS: Enter the following:

• (ART) This is the number of account receivable turnovers in a year.

Average Days: The calculator returns the average number of days  

The Math / Science

This is the approximate n number of days that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients. It is also known as the day's sales in accounts receivable.

Where:
 Days = Total amount of days in period
 AR = Average amount of accounts receivables
 Credit Sales = Total amount of net credit sales during period

EXAMPLE

Assuming that a company has an accounts receivable turnover ratio of 12 times per year, the average collection period is 30.42 days (365 divided by 12).