Receivable Conversion Period Law and Legal Definition

Receivable conversion period is the time between the sale of the final product on credit and cash receipts for the accounts payable. Receivables conversion period is also known as Average Collection Period. Average Collection Period measures the average number of days it takes for the company to collect revenue from its credit sales. The company will usually state its credit policies in its financial statement, so the average collection period can be easily measured as to whether or not it is indicating positive or negative information.