Average Collection Period Calculator Formula

The average collection period formula is the number of days in a period divided by the receivables turnover ratio.  Our average collection period calculator uses 365 for the numerator as the typical scenario for the average collection period formula is during an annual review of the period.

If you need to evaluate the average collection period for a different time period, simply change the numerator to your time period and use the same formula.

Recievables Turnover

Avg. Collection Period:


Average Collection Period Formula

The formula to calculate the average collection period is as follows:

Avg = 365/RT

Where…

Avg = the average collection period
365 = time period for the average
RT = Receivables Turnover (you can substitute average accounts receivables/sales revenue here as well)