answersLogoWhite

0

The creditors' payment period is an activity ratio. It measures the average amount of days the business takes to pay its creditors i.e. suppliers. The more days available to pay the better.

User Avatar

Wiki User

14y ago

What else can I help you with?

Continue Learning about Accounting

Why original creditors sale accounts to a collection agency?

Original creditors sale their accounts to collection agencies when the account has been past due and they have not effectively collected. At that time, the original creditor will charge off the balance from their accounts receivable and turn the account over to a collection agency. When the collection agency collects the debt, a portion of the amount received is paid the the collection agency and the remainder is returned to the original creditor as profit.


If the accounts receivable turnover ratio is decreasing what will happen to the average collection period?

Avg Collection Period increases.


Is it better to pay original creditor who still owns account or debt collection agency who is collecting for original creditor?

Paying the collection agency will clear up your account much quicker and some creditors will return the payment to you if you send it directly to them. Most creditors sign a contract with a collection agency and cannot discuss the debt with the debtor once they place it with the agency, they must refer all correspondence, communications and payments to the agency for the life of that contract.


Examples of creditors ledger and a creditors journal?

creditors journal


What does a high average collection period indicate?

A high average collection period indicates that a firm is having trouble collecting its outstanding credit, thereby transferring it to their accounts receivables. It could be because of policy - maybe no fees, or the management in charge of collection is not doing their job.

Related Questions

How long will it be until unsecured creditors contact you after your chapter 13 is dismissed?

There is no definite answer as creditors establish their individual collection procedures, it might also depend upon whether it is the original creditor or a collection agency.


What are the duties of collection lawyers?

The duties of a collection lawyer is to collect debts, fees and payments from clients of their company. Collection lawyers represent banks, the government and other creditors.


How much do creditors generally sell bad debts to collection agencies for?

Twenty cents


With a voluntary chapter 13 dismissal how long do you have before the creditors attempt to collect debt?

In a voluntary Chapter 13 dismissal, creditors can typically resume collection efforts immediately after the case is dismissed. There is no waiting period; the automatic stay that protected you from creditor actions during the bankruptcy proceeding is lifted upon dismissal. Consequently, creditors can initiate lawsuits, wage garnishments, or other collection activities without delay. It’s advisable to consult with a bankruptcy attorney to understand your options and plan your next steps.


Why original creditors sale accounts to a collection agency?

Original creditors sale their accounts to collection agencies when the account has been past due and they have not effectively collected. At that time, the original creditor will charge off the balance from their accounts receivable and turn the account over to a collection agency. When the collection agency collects the debt, a portion of the amount received is paid the the collection agency and the remainder is returned to the original creditor as profit.


What is the average collection period?

The average collection period is the amount of time that is taken to recover money. Often the average collection period applies to business and sale-related circumstances.


How do you know if you have debt in collections?

You can know if you have debt in collections by checking your credit report, receiving collection notices from creditors, or being contacted by debt collection agencies.


If the accounts receivable turnover ratio is decreasing what will happen to the average collection period?

Avg Collection Period increases.


What is the preference period on bankruptcy?

A preference period is based on the relationship that a debtor has with a creditor. The debtor cannot transfer money to non-insider creditors during a 90 day period before filing for bankruptcy. The preference period for transfers made to insider creditors can be increased up to one year.


Is it true that creditors cannot report delinquency as long as you pay at least 10 dollars?

No, this is not true. Creditors and collection agencies have a legal right to report any amount owed regardless of payments being made. It is beneficial, however, to negotiate with a creditor or collection agency in this respect. If you agree to pay a certain amount of money each month, they may hold off on credit reporting. Talking with collection agencies and creditors is always advised. It can eliminate stress and sometimes debt!


Does the money left to a beneficiary in the state of ga have to be paid to the creditors of the deceased?

Yes. The creditors of the decedent must be paid first if there are any assets in the estate. Once the creditors have been paid any assets that remain pass to the beneficiary. When the estate is probated the creditors have a statutory period during which they must file a claim. That period varies from state to state. Once the period passes the assets can be distributed to the beneficiaries. You should speak with the attorney who is handling the estate.


Is there a statute of limitations on how long creditors can collect on charged-off accounts?

Statute of limitations is a term that applies to how long a consumer can be sued to recover a defaulted debt. It has no bearing on collection activity. There is a separate time period for how long a charge off can show on your credit report. A creditor can attempt collection on an unpaid debt forever. It's just that after these two time frames have passed, their collection efforts have no "teeth".