Accounts receivable collection period

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Updated: Aug 20, 2021

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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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.