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Accounts receivable collection period
A comparison of the receivables to the sales activity of a business is called the accounts receivable collection period or days sales outstanding. This comparison is used to evaluate how long customers are taking to pay a company. A low figure is considered best, since it means that a business is locking up less of its funds in accounts receivable, and so can use the funds for other purposes. Also, when receivables remain unpaid for a reduced period of time, there is less risk of payment default by customers.
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