Enter the total unpaid invoices and the total revenue for a period into the calculator to determine the credit period.

## Credit Period Formula

The following formula is used to calculate a credit period.

CP = 365 * (UI / SR)

• Where CP is the credit period (days)
• UI is the unpaid invoices for the period ($) • SR is the sales revenue for the period ($)

To calculate the credit period, divide the unpaid invoices by the sales revenue, then multiply the result by 365.

## What is a credit period?

Definition:

A credit period is a measure of the total average time a company has to pay its bills, or similarly, the total amount of time a company gives its customers to pay its bills.

## How to calculate credit period?

Example Problem:

The following example outlines how to calculate an average credit period.

First, determine the total unpaid invoices for a time period. In this example, there are $20,000.00 in unpaid invoices. Next, determine the sales revenue in the same period. The sales revenue for the period is$250,000.00.

Finally, calculate the average credit period using the formula above:

CP = 365 * (UI / SR)

CP = 365 * (20,000 / 250,000)

CP = 29.2 days