The average collection period
in the index system represented the time of SMEs to complete an order and also reflected business capital liquidity and utilization rate, but the most importantly could help the lending e-commerce platform know the risk in granting credit and collecting loans-the risk of collecting loans back was higher if the average collection period
As well, there is a significant relation between average collection period
and value of the listed companies in Tehran stock exchange.
They used ROA as a measure of firms profitability and average collection period
, inventory conversion period, payable deferral period and cash conversion cycle as independent and firm size, sales growth as a control variables.
7 days to payment from invoice date, with an average collection period
The cash conversion cycle is equal to the inventory conversion period (days of inventory) plus the average collection period
(ACP) or (DSO) less payables deferral period.
A similar non-linear relationship to sales growth is also found with average collection period
(DSO) and average days' credit (DPO).
When the collections division was established in 1984, invoices more than 120 days past due totaled $567,000, the average collection period
was 67 days, and only 32 percent of invoices were collected within 30 days.
Besides keeping track of which customers are behind and by how much, you should be aware of your average collection period
- accounts receivable divided by sales per day.
Currently the management is concerned that the average collection period
is fifty-four days in spite of the thirty-day credit period.
And these statistics are just the beginning of this comprehensive report go beyond the revenue and profit data to chargeability, revenue factor, overhead rates, average collection period
, backlog, staff turnover, and more to see which areas your firm could improve.
The rating reflect the continuous drop of the company's revenues, its highly leveraged capital structure, medium scale of operations, working capital intensive nature of operations and high average collection period
Selling terms are net 30 and average collection period
or days sales outstanding is 39 days, below the industry average of 43 days.