Receivables collection period
Receivables collection period is trade receivables divided by annual credit sales, multiplied by 365 days. A rising collection period may suggest slower payment, but it can also reflect seasonal sales or a change in credit policy. Use comparable figures and investigate aged balances. The calculated figure is an average approximation, not the precise age of every invoice.
Worked example
Closing trade receivables of 100 and annual credit sales of 1,000 give 36.5 days using the closing-balance convention.
Common mistake
Use credit sales when available; if only total sales are given, note the approximation and whether average or closing balances are used.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F1 | Direct | Official assessment-window verification pending |
| CIMA | F2 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Receivables days, Collection period