Average Collection Period Calculator
See how many days, on average, it takes customers to pay you. Enter your average accounts receivable, net credit sales for the period, and the number of days in it.
365 for a year, 90 for a quarter, 30 for a month
The formula
- Average collection period = average receivables ÷ net credit sales × days in period
- Also known as days sales outstanding (DSO)
Example. With $60,000 of average receivables and $600,000 of net credit sales over 365 days, the average collection period is $60,000 ÷ $600,000 × 365 = 36.5 days.
Things to check
- Match the days to the period. Use 365 for a year, 90 for a quarter, 30 for a month, with credit sales for the same period.
- Compare the result with your payment terms. A 45-day average on Net 30 terms means customers are paying late on average.
- If the figure is rising, look at which customers or invoice ages are growing. The days past due calculator and aging buckets help.
Frequently asked questions
What is the average collection period?
The average number of days it takes to turn a credit sale into cash. It is closely related to days sales outstanding.
What is a good average collection period?
A common rule of thumb is that it should be no more than about a third longer than your payment terms. For Net 30 that is around 40 days.
How can I shorten it?
Invoice right away, state terms clearly, send reminders before and after the due date, offer easy ways to pay online, and consider early-payment discounts or deposits.
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Calculators give estimates from the numbers you enter. They are not tax, legal, or accounting advice.