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What is Debtor Collection Period Explained about?
The debtor collection period is the amount of time it takes a company to collect all trade debts. A shorter collection period indicates a more efficient company, while a longer period suggests problematic debtors or less efficiency. It is calculated by dividing average debtors by credit sales and multiplying by 365. A lower debtor collection period is generally seen as more positive than a higher period because it means the company is collecting payments faster.
- Author
- Sakshi Goel
- Language
- EN