To calculate the accounts receivable collection period, divide the average accounts receivable by the total credit sales and multiply the result by the number of days in the period. The average accounts receivable can be found by adding the beginning and ending accounts receivable balances and dividing by two. This formula provides insight into how long it takes for a company to collect payments from its customers on average.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Enterprise Receivables Management System to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
