The term Debtor Collection Period indicates the average time taken to collect trade debt

Debt

A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...

s. In other words, a reducing period of time is an indicator of increasing efficiency. it enables the enterprise to compare the real collection period with the granted/theoretical credit

Credit (finance)

Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...

 period.

Debtor Collection Period = (Average Debtor

Debtor

A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...

s / Credit Sales) x 365 ( = No. of days)
(average debtors = debtors at the beginning of the year + debtors at the end of the year, divided by 2)

Credit Sales are all sales made on credit (i.e. excluding cash sales)
A long debtors collection period is an indication of slow or late payments by debtors.

The multiplier may be changed to 12 (for months) or 52 (for weeks) if appropriate.