{"id":143,"date":"2015-05-29T09:38:05","date_gmt":"2015-05-29T07:38:05","guid":{"rendered":"http:\/\/wpcalc.com\/?p=143"},"modified":"2026-09-30T19:25:29","modified_gmt":"2026-09-30T16:25:29","slug":"average-collection-period","status":"publish","type":"post","link":"https:\/\/wpcalc.com\/en\/finance\/average-collection-period\/","title":{"rendered":"Average Collection Period Converter"},"content":{"rendered":"<section class=\"not-prose calculator-box\" aria-labelledby=\"calculator-title\"><div class=\"flex items-baseline sm:items-center justify-between gap-2 sm:gap-3\"><div class=\"flex flex-col sm:flex-row sm:items-center gap-2\"><span class=\"icon icon-calculator text-primary-700! text-base! dark:text-primary-300!\" aria-hidden=\"true\"><\/span><h2 id=\"calculator-title\" class=\"text-lg font-display font-bold\">Receivables Collection Period Calculator<\/h2><\/div><div class=\"calcdash-favorite group\">\n  <button type=\"button\" class=\"favorite\" id=\"favorite\" data-favorite-id=\"143\" data-favorite-title=\"Average Collection Period\" data-favorite-url=\"https:\/\/wpcalc.com\/en\/finance\/average-collection-period\/\" data-favorite-excerpt=\"Calculate the average collection period to find out how many days it takes your business to collect payments from credit customers. Enter accounts receivable, net credit sales, and the period length.\" aria-label=\"Add to Favorites\" data-favorite-icon=\"icon icon-inventory\">\n    <span class=\"icon icon-shape-star-empty\" aria-hidden=\"true\"><\/span>\n  <\/button>\n  <div class=\"calcdash-favorite__tip\" aria-hidden=\"true\">\n   <span class=\"favorite-tooltip\" id=\"favorite-tooltip\"><\/span>\n  <\/div>\n  <span class=\"sr-only\" role=\"status\" id=\"favorite-status\"><\/span>\n<\/div><\/div><form action=\"https:\/\/wpcalc.com\/en\/finance\/average-collection-period\/\" method=\"POST\" class=\"calculator\" id=\"calculator-143\" data-post=\"143\"><fieldset class=\"fieldset-input\"><legend class=\"sr-only\">Input Fields<\/legend><div class=\"field has-term\" id=\"input-1\"><label for=\"field-1\">Accounts receivable<\/label><div class=\"term\">AR<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"accounts_receivable\" id=\"field-1\" aria-describedby=\"calc-unit-1 calc-info-1\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"25000\"\/><div class=\"unit\" id=\"calc-unit-1\">$<\/div><small id=\"calc-info-1\">The amount of money owed by customers<\/small><\/div><div class=\"field has-term\" id=\"input-2\"><label for=\"field-2\">Net credit sales<\/label><div class=\"term\">CS<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"net_credit_sales\" id=\"field-2\" aria-describedby=\"calc-unit-2 calc-info-2\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"0\" value=\"150000\"\/><div class=\"unit\" id=\"calc-unit-2\">$<\/div><small id=\"calc-info-2\">Total sales made on credit minus returns and allowances<\/small><\/div><div class=\"field has-term\" id=\"input-3\"><label for=\"field-3\">Number of days<\/label><div class=\"term\">D<\/div>  <div class=\"absolute bottom-0 left-16 top-8 w-2 h-0.5 bg-blue-500\"><\/div><input type=\"text\" name=\"number_of_days\" id=\"field-3\" aria-describedby=\"calc-info-3\" data-number inputmode=\"decimal\" autocomplete=\"off\" spellcheck=\"false\" min=\"1\" value=\"365\"\/><small id=\"calc-info-3\">Typically 365 for annual, or 90 for quarterly analysis<\/small><\/div><\/fieldset><div class=\"buttons\"><button type=\"submit\" data-text=\"Re-Calculate\" id=\"calculate-button\" data-post=\"143\">Calculate<\/button><button type=\"reset\">Reset<\/button><\/div><div class=\"field is-checkbox hidden!\" id=\"field-auto-calc\"><input type=\"checkbox\" id=\"auto-calc\"><label for=\"auto-calc\">Calculate automatically<\/label><small>If enabled, the result will update automatically when you change any value.<\/small><\/div><div class=\"fieldset-result is-hidden\" aria-labelledby=\"result-title\" aria-live=\"polite\" role=\"region\"> <h3 class=\"result-title bg-gradient-to-r from-primary-50 to-gray-50 dark:from-primary-900 dark:to-gray-800\" id=\"result-title\"><span class=\"icon icon-s-pulse\" aria-hidden=\"true\"><\/span> Your Results<\/h3><div class=\"result-box\"><div class=\"field-result\" id=\"output-1\"><span class=\"field-title\"><span>Average Collection Period<\/span><\/span><span class=\"field-value\" id=\"result-1\" data-unit=\"days\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><div class=\"field-result is-column\" id=\"output-2\"><span class=\"field-title\"><span>Interpretation<\/span><\/span><span class=\"field-value\" id=\"result-2\"><\/span><button type=\"button\" class=\"copy-result\" data-tooltip=\"Copy Result\" aria-label=\"Copy Result\"><span class=\"copy-icon icon icon-document-copy\" aria-hidden=\"true\"><\/span><\/button><\/div><\/div><div class=\"result-actions\"><button type=\"button\" class=\"copy-link\"><svg viewBox=\"0 0 20 20\" fill=\"currentColor\" aria-hidden=\"true\"><path d=\"M12.232 4.232a2.5 2.5 0 0 1 3.536 3.536l-1.225 1.224a.75.75 0 0 0 1.061 1.06l1.224-1.224a4 4 0 0 0-5.656-5.656l-3 3a4 4 0 0 0 .225 5.865.75.75 0 0 0 .977-1.138 2.5 2.5 0 0 1-.142-3.667l3-3Z\"\/><path d=\"M11.603 7.963a.75.75 0 0 0-.977 1.138 2.5 2.5 0 0 1 .142 3.667l-3 3a2.5 2.5 0 0 1-3.536-3.536l1.225-1.224a.75.75 0 0 0-1.061-1.06l-1.224 1.224a4 4 0 1 0 5.656 5.656l3-3a4 4 0 0 0-.225-5.865Z\"\/><\/svg><span class=\"copy-link__text\">Copy link to this calculation<\/span><\/button><span class=\"sr-only\" role=\"status\" id=\"copy-link-status\"><\/span><\/div><\/div><a href=\"#respond\" class=\"hidden transition-opacity duration-300 opacity-0 w-50 text-sm justify-center items-center gap-2 px-4 py-2 rounded bg-gray-200 text-gray-700 hover:bg-gray-300\" id=\"leave-comment\"><span class=\"icon icon-comments\" aria-hidden=\"true\"><\/span>Leave a Comment<\/a><\/form><\/section><section id=\"calc-reactions\" class=\"not-prose hidden my-12 bg-gradient-to-r from-primary-50 to-gray-50 border border-indigo-100 rounded-xl px-6 py-4 shadow-sm\" data-post=\"143\" aria-live=\"polite\" aria-labelledby=\"calc-reactions-title\"><p id=\"calc-reactions-title\" class=\"text-sm text-gray-500 text-center mb-2\">How did this result make you feel?<\/p><div role=\"group\" aria-labelledby=\"calc-reactions-title\" class=\"grid grid-cols-3 sm:flex sm:flex-row sm:justify-around gap-4 sm:items-center sm:flex-wrap\"><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"like\"><span class=\"reaction-count\" data-reaction-count=\"like\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude00 <\/span><span class=\"reaction-description font-medium\">Like <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"helpful\"><span class=\"reaction-count\" data-reaction-count=\"helpful\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\udca1 <\/span><span class=\"reaction-description font-medium\">Helpful <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"confused\"><span class=\"reaction-count\" data-reaction-count=\"confused\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude15 <\/span><span class=\"reaction-description font-medium\">Confused <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"disappointed\"><span class=\"reaction-count\" data-reaction-count=\"disappointed\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\ud83d\ude1e <\/span><span class=\"reaction-description font-medium\">Disappointed <\/span><\/button><button type=\"button\" aria-pressed=\"false\" class=\"reaction-btn flex flex-col items-center gap-1 text-sm text-gray-700 hover:text-primary-600 cursor-pointer transition-transform hover:scale-105\" data-reaction=\"inaccurate\"><span class=\"reaction-count\" data-reaction-count=\"inaccurate\">0<\/span><span class=\"reaction text-3xl\" aria-hidden=\"true\">\u274c <\/span><span class=\"reaction-description font-medium\">Inaccurate <\/span><\/button><\/div><div id=\"reaction-message\" class=\"hidden mt-8 rounded-md border border-primary-100 bg-white\/50 backdrop-blur-sm px-4 py-2 text-sm text-center shadow-sm\"><\/div><\/section><div class=\"calcdash-ad not-prose calcdash-ad--calc_result calcdash-ad--in-article\"><ins class=\"adsbygoogle\" style=\"display:block\" data-ad-client=\"ca-pub-1721569815777345\" data-ad-slot=\"6317458308\" data-ad-layout=\"in-article\" data-ad-format=\"fluid\"><\/ins><script>(adsbygoogle = window.adsbygoogle || []).push({});<\/script><\/div>\n<style id=\"wpcoderpro-inline-1\">.formula-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section class=\"formula-box\" aria-labelledby=\"formula-title\">\r\n\t<div id=\"formula-title\" class=\"not-prose font-display mb-4\"><span class=\"icon icon-formula\" aria-hidden=\"true\"><\/span><h2>Average Collection Period Formula<\/h2><\/div>\r\n\t<figure class=\"not-prose formula\">\r\n\t\t<figcaption class=\"formula-title\">Formula<\/figcaption>\r\n\t\t<div class=\"text-base text-gray-800\" id=\"formula\">\n\\[ \\text{Average Collection Period} = \\frac{\\text{Accounts Receivable}}{\\text{Net Credit Sales}} \\times \\text{Number of Days} \\]\n<\/div>\r\n\t<\/figure>\r\n\t<\/p>\n<p><strong>Where:<\/strong><\/p>\n<ul>\n<li>\\(AR\\) \u2014 accounts receivable, the total amount customers currently owe the business ($)<\/li>\n<li>\\(CS\\) \u2014 net credit sales, total sales made on credit minus returns and allowances ($)<\/li>\n<li>\\(D\\) \u2014 number of days in the period, typically 365 for annual or 90 for quarterly analysis<\/li>\n<\/ul>\n<p>The formula first finds what fraction of a period's credit sales is still uncollected, then converts that fraction into days. The result is the average number of days between making a credit sale and receiving the cash.<\/p>\n<p>\r\n<\/section>\n<style id=\"wpcoderpro-inline-459\">.calculation-box {\r\n\tborder-bottom: none !important;\r\n}<\/style><section id=\"calculation\" class=\"calculation-box\" aria-labelledby=\"calculation-title\">\r\n\t<div id=\"calculation-title\" class=\"not-prose font-display\"><span class=\"icon icon-unordered-list\" aria-hidden=\"true\"><\/span><h2>Average Collection Period \u2013 Calculation Example<\/h2><\/div>\r\n\r\n<\/p>\n<p><strong>Example:<\/strong> a company has $25,000 in accounts receivable and recorded $150,000 in net credit sales over the past year (365 days).<\/p>\n<p>\\[ \\text{Average Collection Period} = \\frac{25{,}000}{150{,}000} \\times 365 = 0.1667 \\times 365 \\approx 60.83 \\text{ days} \\]<\/p>\n<p><strong>Result:<\/strong> the company takes about <strong>60.83 days<\/strong> on average to collect payment from its customers.<\/p>\n<p>\n\r\n<\/section>\n<h2>How to Use the Calculator<\/h2>\n<ol>\n<li>Enter your <strong>Accounts receivable<\/strong> balance \u2014 the amount currently owed to you by customers.<\/li>\n<li>Enter your <strong>Net credit sales<\/strong> \u2014 total credit sales for the period, after subtracting returns and allowances.<\/li>\n<li>Enter the <strong>Number of days<\/strong> matching your sales figure: 365 for annual data or 90 for quarterly data.<\/li>\n<li>Read the <strong>Average Collection Period<\/strong> in days, along with an interpretation of whether collections are fast, moderate, or slow.<\/li>\n<\/ol>\n<h2>What Is the Average Collection Period?<\/h2>\n<p>The average collection period (also called days sales outstanding, or DSO) measures the average number of days a business needs to turn its credit sales into cash. It is a core liquidity and efficiency metric for any company that sells on credit, because receivables only become useful once they are actually collected.<\/p>\n<p>A short collection period means customers pay quickly, cash flows back into the business sooner, and less working capital is tied up in receivables. A long collection period means money sits with customers longer, which can strain cash flow even when sales and profits look healthy on paper.<\/p>\n<p>How you interpret the number depends heavily on context. Many industries operate on 30-day payment terms, so a period of 30\u201345 days may be perfectly normal, while businesses in construction or wholesale often see 60\u201390 days as standard. The most useful comparisons are against your own credit terms (if you offer net 30 and collect in 55 days, customers are paying late) and against your results in previous periods, where a rising trend is an early warning sign.<\/p>\n<p>The average collection period is closely related to <a href=\"https:\/\/wpcalc.com\/en\/finance\/acid-test-ratio\/\">liquidity ratios<\/a> and overall asset efficiency \u2014 together with metrics like <a href=\"https:\/\/wpcalc.com\/en\/finance\/total-asset-turnover\/\">total asset turnover<\/a>, it shows how productively the business converts its resources into cash.<\/p>\n<h2>How to Improve a Slow Collection Period<\/h2>\n<ul>\n<li><strong>Tighten credit checks<\/strong> before extending terms to new customers.<\/li>\n<li><strong>Offer early-payment discounts<\/strong> \u2014 for example, 2\/10 net 30 \u2014 to encourage faster payment. You can evaluate the cost of such discounts with the <a href=\"https:\/\/wpcalc.com\/en\/finance\/discount-lost\/\">Discount Lost<\/a> calculator.<\/li>\n<li><strong>Invoice promptly and follow up<\/strong> with reminders before and after the due date.<\/li>\n<li><strong>Track the metric regularly<\/strong> \u2014 quarterly calculations catch slowdowns before they become cash crises.<\/li>\n<\/ul>\n<h2>Assumptions and Limitations<\/h2>\n<p>The calculator assumes that credit sales occur evenly throughout the period and that the accounts receivable balance is representative of the whole period. For more accuracy with seasonal businesses, use average receivables (beginning plus ending balance divided by two) rather than a single point-in-time balance.<\/p>\n<p>Net credit sales must exclude cash sales \u2014 including them will understate the collection period. Also remember that the raw number says little on its own: a period of 60 days is excellent for some industries and alarming for others. Always compare against your stated payment terms, industry benchmarks, and your own historical trend.<\/p>\n<p>If you are analyzing the broader cash conversion cycle, pair this metric with the <a href=\"https:\/\/wpcalc.com\/en\/finance\/days-in-inventory\/\">Days in Inventory<\/a> calculator to see how long inventory sits before sale as well.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Calculate the average collection period to find out how many days it takes your business to collect payments from credit customers. Enter accounts receivable, net credit sales, and the period length.<\/p>\n","protected":false},"author":70,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[26],"class_list":["post-143","post","type-post","status-publish","format-standard","hentry","category-finance","tag-inventory"],"acf":[],"_links":{"self":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/users\/70"}],"replies":[{"embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/comments?post=143"}],"version-history":[{"count":2,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/143\/revisions"}],"predecessor-version":[{"id":66051,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/posts\/143\/revisions\/66051"}],"wp:attachment":[{"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/media?parent=143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/categories?post=143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wpcalc.com\/en\/wp-json\/wp\/v2\/tags?post=143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}