Dictionary of Accounting Terms: collection period
collection period
number of days it takes to collect accounts receivable. The collection period should be or can be compared to the terms of sale. A long collection period may indicate higher risk in collecting the account; it ties up funds that could be invested elsewhere or used to make timely payments. It equals the number of days in a year divided by the accounts receivable turnover. Assume a 360-day year and turnover rate of 10 times. The collection period is 36 days.
Dictionary of Banking Terms: collection period
collection period
period of time required to convert deposited checks into collected balances. The Expedited Funds Availability Act of 1987 requires banks to credit funds to a customer's account within two days from the date of deposit for local checks, and within five days for nonlocal checks.
