Average Collection Period

The average collection period is Average Accounts Receivable divided by the average daily sales.

If your customers have 30 days to pay, the average accounts receivable should be 30, meaning the customers are taking 30 days to pay. If it’s more than 30, the customers are not paying their bills on time. If it’s less than 30, the customers are paying early.

https://accounting.uworld.com/cpa-review/lc/accounting-dictionary/term/average-collection-period/