The total amount of time a company's
accounts receivable have been uncollected divided by the number of outstanding
invoices. For example, suppose a company has three outstanding invoices, one for 30 days, one for 40 days, and one for 90 days. Their average age is accounted as follows:
Average age of accounts receivable = (30 + 40 + 90) / 3 = 53.33 days