Collection days is supposed to represent the average number of days business waits, on average, between delivering an invoice and receiving payment.

The formula for calculating collection days is:

=(Accounts_receivable_balance*360)/(Sales_on_credit*12)

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Bplans GlossaryBplans Glossary

At Bplans, it's our goal to make it easy for you to start and run your business. The Bplans glossary of common business terms will help you learn about key small business and entrepreneurship topics.