The accounts receivable collection period is the average time a business takes to collect money from customers who bought on credit.

It is calculated as:

Collection Period = (Accounts Receivable ÷ Credit Sales) × 365 days

It helps to:

Measure how quickly customers pay

Check the efficiency of credit policy

Improve cash flow management

A shorter collection period means faster recovery of cash.

In simple terms, it shows how many days a business takes to collect payment from customers.