Debtor collection period

Debtor collection period


The term Debtor Collection Period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. it enables the enterprise to compare the real collection period with the granted/theoretical credit period.

Debtor Collection Period = (Average Debtors / Credit Sales) x 365 ( = No. of days) (average debtors = debtors at the beginning of the year + debtors at the end of the year, divided by 2)

Credit Sales are all sales made on credit (i.e. excluding cash sales) A long debtors collection period is an indication of slow or late payments by debtors.

The multiplier may be changed to 12 (for months) or 52 (for weeks) if appropriate.



Wikimedia Foundation. 2010.

Игры ⚽ Нужно решить контрольную?

Look at other dictionaries:

  • debtor collection period — average collection period The period, on average, that a business takes to collect the money owed to it by its trade debtors. If a company gives one month s credit then, on average, it should collect its debts within 45 days. The debtor… …   Accounting dictionary

  • debtor collection period — average collection period The period, on average, that a business takes to collect the money owed to it by its trade debtors. If a company gives one month s credit then, on average, it should collect its debts within 45 days. The debtor… …   Big dictionary of business and management

  • average collection period — See: debtor collection period …   Accounting dictionary

  • accounts receivable collection period — The time given to customers in which to pay their accounts. It is common to require customers to pay within 30 days, although in practice the collection period is often not respected. As late paying customers can often cause major cash flow… …   Accounting dictionary

  • Debtor days — The debtors days ratio measures how quickly cash is being collected from debtors. The longer it takes for a company to collect, the greater the number of days debtors.[1] Debtor days can also be referred to as Debtor collection period. Definition …   Wikipedia

  • Collection agency — A collection agency is a business that pursues payments of debts owed by individuals or businesses.[1] Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed.[2] There are many… …   Wikipedia

  • Collection of judgments in Virginia — The collection of judgments in Virginia may be accomplished under a number of routes provided under Virginia law, depending on the amount of the judgment and the particular assets that the judgment creditor wishes to pursue. Contents 1… …   Wikipedia

  • accounting ratio — financial ratio A ratio calculated from two or more figures taken from the financial statements of a company in order to provide an indication of the financial performance and position of that company. Ratios may be expressed as a percentage (e.g …   Accounting dictionary

  • current ratio — working capital ratio The ratio of the current assets of a business to the current liabilities, expressed as x:1 and used as a test of liquidity. For example, if the current assets are £250,000 and the current liabilities are £125,000 the current …   Accounting dictionary

  • accounting ratio — financial ratio A ratio calculated from two or more figures taken from the financial statements of a company in order to provide an indication of the financial performance and position of that company. Ratios may be expressed as a percentage (e.… …   Big dictionary of business and management

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”