Average Collection Period Calculator

Formula

The formula to calculate the Average Collection Period (ACP) is:

\[ \text{ACP} = \frac{\text{AR}}{\left(\frac{\text{SRP}}{t}\right)} \]

Where:

\(\text{AR}\) is Accounts Receivable.
\(\text{SRP}\) is Sales for Reporting Period.
\(t\) is Reporting Period Length in days.

Definition

The Average Collection Period is the approximate amount of time that it takes for a business to receive payments owed in terms of accounts receivable.

How to calculate the Average Collection Period

Let's assume the following values:

Accounts Receivable (AR) = 2000
Sales for Reporting Period (SRP) = 458000
Reporting Period Length (t) = 30 days

Using the formula:

\[ \text{ACP} = \frac{2000}{\left(\frac{458000}{30}\right)} \]

Evaluating:

\[ \text{ACP} = 0.13 \text{ days} \]

The Average Collection Period is 0.13 days.

Conversion Table

Accounts Receivable	Sales for Reporting Period	Reporting Period Length (days)	Average Collection Period (days)
1900	450000	29	0.12
1900	450000	30	0.13
1900	450000	31	0.13
1900	455000	29	0.12
1900	455000	30	0.13
1900	455000	31	0.13
1900	460000	29	0.12
1900	460000	30	0.12
1900	460000	31	0.13
2000	450000	29	0.13
2000	450000	30	0.13
2000	450000	31	0.14
2000	455000	29	0.13
2000	455000	30	0.13
2000	455000	31	0.14
2000	460000	29	0.13
2000	460000	30	0.13
2000	460000	31	0.13
2100	450000	29	0.14
2100	450000	30	0.14
2100	450000	31	0.14
2100	455000	29	0.13
2100	455000	30	0.14
2100	455000	31	0.14
2100	460000	29	0.13
2100	460000	30	0.14
2100	460000	31	0.14