Transparent Growth Measurement (NPS)

Average Collection Period Calculator

Optimize Cash Flow by Tracking the Average Collection Period

Use our Average Collection Period Calculator to determine the average time it takes for your business to collect payments from credit sales. This metric helps assess your cash flow efficiency and customer payment behavior.

Why Use This Calculator?

 

  • Evaluate Cash Flow Efficiency: Understand how quickly your business is converting credit sales into cash. 
  • Track Payment Collection Trends: Identify if there are delays in payment collection that could impact your business’s liquidity. 
  • Enhance Credit Management: Improve credit policies by tracking how long it takes to collect payments on average. 
  • Optimize Working Capital: Reduce the collection period to ensure you have a steady cash flow for operations.
-

Hmmm… looks like we can help you refine those numbers for better results and profitability!

Get Started!

7 Important Metrics Every Startup Founder Should Care About

Do you all know that it’s more costly to acquire new prospects than to retain existing ones! That’s why extending your CLV is essential to a healthy business model & overall business strategy… Don’t believe us? Here is an Ebook on 7 vital metrics every startup founder should know – you need to read if you want to increase profitability, retention and overall ecommerce success.

Download

Why these 7 metrics are significant for your business and should be measured at regular intervals?

How to Use Average Collection Period Calculator?

How to Use the Calculator – Step-by-Step

 

  1. Enter Opening Balance
    Input the accounts receivable balance at the beginning of the period.
  2. Enter Closing Balance
    Input the accounts receivable balance at the end of the period.
  3. Enter Total Credit Sales
    Input the total amount of credit sales made during the period.
  4. Enter Days
    Specify the number of days for the period (e.g., a month would be 30 or 31 days).
  5. Click ‘Calculate’
    Instantly get the average collection period and evaluate your cash flow efficiency.

 

Tip: Regularly monitor the average collection period to identify if improvements can be made in your payment collection process.

As you optimize your cash flow, consider using our Liquid Net Worth Calculator to assess your financial health and available liquid assets.

 

Understanding Average Collection Period

 

The Average Collection Period (ACP) is a key metric that tells you how long, on average, it takes to collect outstanding payments from credit sales. A shorter ACP means your business is collecting payments quickly, which can help improve cash flow. A longer ACP could indicate delayed payments, which may negatively affect liquidity and working capital.

 

Industry Benchmarks for Average Collection Period

 

Industry Typical ACP (Days)
SaaS / Software 15 – 45
E-commerce 20 – 40
Healthcare 30 – 60
Manufacturing 30 – 90
Financial Services 10 – 30

 

Note: These benchmarks can vary based on business models, customer payment behavior, and sales processes. Always compare your ACP with industry standards and adjust credit policies as needed.

 

Practical Example

 

Scenario:

 

 

Calculation:


Average Collection Period=[(50,000+60,000​)/2]÷500,000×30=3 days

 

Interpretation:


Your average collection period is 3 days, which indicates that, on average, it takes your business 3 days to collect payments after making a credit sale. A shorter collection period generally indicates efficient collections.

 

Tips to Improve Average Collection Period

 

Other Calculator

Explore More

Similar Blog's

How a never-ending fight between CPC & Ad position impacts Conversion Rates
The digital transformation is result of evolution in consumer behavior with increased internet penetration into almost every aspect of life.
Read More
How Controlling CPL can Increase Conversions in Google Ads
Google Ads have become the cornerstone for every digital marketer in internet marketing and it becomes necessary to scale up Google Ads campaign.
Read More
7 Best Landing Page Practices to Boost Conversions by 300%
Alot can be achieved by keeping a track of competitor traffic volumes and their customer approach strategies. Digital marketer will genuinely enjoy watching conversion boost.
5 Signs That Your Landing Page is Killing Your Conversion Rate
The reason for your landing page conversion rates falling is a practical and realistic scenario. How do you think you can resolve this crisis?
5 Tricks to Optimize Landing Page and Maximum Conversions with SEO
5 Tricks to Optimize Landing Page and Maximum Conversions with SEO
it’s critical to make sure that you optimize both for their intended purpose. To do that, you have to understand it differ in 4 key areas
How Keyword Match Types Can Help You Boost The Conversions
Once you’ve nailed the SEO, you can start building a thorough research on keyword match types to help boost conversions.

Offer’s

Energize Your Strategy: Claim Your FREE Ultimate Digital Marketing Checklist! Explore exclusive tips, innovative hacks, and customized insights for YOUR business triumph. Secure your game-changing resource today!

SEO Quizzes

SEO quizzes: Interactive tools for learning and testing search engine optimization knowledge. Enhance skills, stay updated, and boost website visibility.

advance technical seo quiz
Advance Technical SEO Quiz For Experts & Professionals

Whether you’re an experienced SEO practitioner or a an unbeatable SEO expert, this Advance Technical SEO Quiz is a great way to assess your SEO knowledge. So, let’s get started and see how much you know! Good luck!

Test Now
google eat quiz
Google's E-A-T Quiz: Determine your Expertise

Are you ready to assess your website’s E-A-T (Expertise, Authoritativeness, Trustworthiness) performance? Take our E-A-T quiz to get an understanding of where your website stands in terms of these essential SEO metrics.

Test Now




FAQ

Answers to Frequently Asked Questions

What is the cost of doing business?

It’s the total amount a company spends annually on operations, including both fixed and variable costs, excluding any direct revenue-generating activities.

Why should I calculate my cost of doing business?

 It helps you understand your daily operational expenses and ensure your pricing and revenue models are sustainable.

How can I reduce my cost of doing business?

Streamline operations, reduce overhead costs, optimize pricing, and improve cost-effectiveness in every department.

How can I improve profitability with my cost of doing business?

By monitoring your CODB and ensuring that your daily revenue exceeds your cost per day, you can ensure higher profit margins.

 

Should I calculate the cost of doing business monthly or annually?

Calculate it annually for a broad overview but monitor it monthly to adjust your strategies as needed.

Contact Us