# Average Collection Period Calculator

URL: https://speedycalculator.com/calculators/finance/average-collection-period/
Last updated: 2026-10-25

> The average collection period calculator works out how many days it takes on average to collect payment from credit customers, from average accounts receivable and credit sales, and compares it with your credit terms.

## Inputs

- Average accounts receivable
- Annual credit sales
- Days in the year
- Credit terms (days)

## Results

- Average collection period
- Receivables turnover
- Compared with your terms

## Formula

```
Average collection period = average accounts receivable ÷ credit sales × 365
or = 365 ÷ receivables turnover
```

## Explanation

A short collection period means cash comes in quickly. If it is much longer than your credit terms (for example 30 days), customers are paying late and your working capital is tied up in receivables.

### How to use the Average Collection Period Calculator

- **Average accounts receivable**
- **Annual credit sales**
- **Days in the year**
- **Credit terms**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter average accounts receivable, annual credit sales and the credit terms you offer.

### Tips

- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.

### Common mistakes to avoid

- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.

### Inputs explained

FieldWhat to enterAverage accounts receivableAmount in your currencyAnnual credit salesAmount in your currencyDays in the yearA numberCredit termsIn days

### What each result means

- **Average collection period** = [Average accounts receivable]÷[Annual credit sales]×[Days in the year]
- **Receivables turnover** = [Annual credit sales]÷[Average accounts receivable]

### Example values

How the main result changes when **Average accounts receivable** changes and everything else stays at the example values above:

Average accounts receivableAverage collection period (days)25,00018.337,50027.450,00036.562,50045.675,00054.8100,00073

## Worked example

Inputs — Average accounts receivable: $50,000; Annual credit sales: $500,000; Days in the year: 365; Credit terms: 30 days.

Results — **Average collection period = 36.5 days**; Receivables turnover = 10 ×; Compared with your terms = Somewhat slow.

## FAQ

**What does the average collection period tell me?**
How quickly customers pay – the lower, the better for cash flow.

**Is it the same as DSO?**
Yes, days sales outstanding is calculated the same way.

**How do I shorten it?**
Tighter credit checks, early-payment discounts and prompt reminders.

**What formula does the Average Collection Period Calculator use?**
Average collection period = average accounts receivable ÷ credit sales × 365.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)