Collection Speed
Collection speed is a RunwayCal planning metric for elapsed time between a defined commercial event and the first recorded receipt tied to that context.
It is not a standardized accounting metric. The starting event must be named, because invoice date, due date, milestone date, and deal context produce different intervals.
Collection speed describes observed or assumed timing. It does not prove why payment was delayed, predict a future receipt date, or replace days sales outstanding.
Anchor the clock before measuring the delay
A collection-speed number is interpretable only when the commercial starting event and receipt endpoint are explicit.
- 01Defined event
Invoice, due date, milestone, or supported deal context
- 02Due or expected timing
Terms and expectations remain separate from observed receipt
- 03First landed receipt
Recorded cash event used as the endpoint
- 04Elapsed interval
Calendar days between the selected anchor and receipt
A historical average can inform planning but cannot determine when a specific future payment will arrive.
What is Collection Speed?
Collection speed measures the elapsed time between a defined commercial event and a receipt. It is a planning metric rather than a standardized accounting measure, so the starting event and receipt rule must accompany the number.
The public RunwayCal calculator measures completed invoice-to-payment intervals. RunwayCal’s in-product metric has a different verified boundary: deal or expected-cash context to the first landed receipt. These results should not be combined without normalizing the anchor and endpoint.
Payment terms express when cash is due. Expected dates express an assumption. Collection speed describes observed or assumed elapsed timing under a stated method. A receipt is realized cash only when it is recorded.
Choose the event that starts the clock
Invoice date
Useful for completed invoice-to-payment observations when invoices and receipts can be matched.
Due date
Useful for measuring lateness against terms, but it answers a different question from total invoice-to-payment time.
Milestone date
Relevant when collection depends on a documented project milestone or draw process.
Deal or expected-cash context
The verified in-product RunwayCal anchor for collection timing to the first landed receipt.
Collection speed versus payment terms and DSO
Terms are contractual or commercial expectations, not observed behavior. Days sales outstanding is an accounting ratio based on receivables and credit sales, usually at an aggregate level. Collection speed is an event-to-receipt interval under the chosen method. The three measures can inform one another but should not be labeled as the same metric.
Averages need distribution context
A mean can hide a wide spread, partial receipts, unmatched records, and a few slow observations. Review the number of completed observations, median or range where available, customer concentration, and outliers. Exclude open items rather than inventing receipt dates.
Why it matters
Collection timing changes when expected customer cash can support obligations. A contract can be valuable while its cash arrives too late for a near-term payroll or commitment. Separating terms, expected timing, and received cash makes that pressure visible.
The metric should guide review, not automate a conclusion. A slower interval may reflect disputes, milestone structure, seasonality, data gaps, or ordinary customer behavior. Investigation supplies the explanation.
Formula after the anchor is defined
- A consistent commercial-event anchor
- A first recorded receipt linked to the same context
- Completed observations only for a historical average
- A disclosed treatment of partial receipts, reversals, unmatched cash, and open items
Formula after the anchor is defined
Collection interval = First recorded receipt date − Defined commercial-event date Average collection speed = Sum of completed collection intervals ÷ Number of completed observations
One receipt, two different timing questions
An invoice is issued on 3 May and its first matched payment is recorded on 28 May. Under an invoice-to-first-payment method, the interval is 25 calendar days. If the contractual due date was 17 May, the payment was 11 days after due date, which is a separate measure.
Neither result determines when the next invoice will be paid. A planning assumption can use observed timing, but the future receipt should remain expected until cash lands.
How RunwayCal helps
RunwayCal’s in-product Collection Speed measures days from deal or expected-cash context to the first landed receipt. Collections Planning keeps expected and received cash separate and uses the timing as operating evidence rather than a prediction.
The public Collection Speed calculator measures completed invoice-to-payment intervals or models a simple receivables estimate. It explicitly excludes open invoices from completed observations instead of inventing payment dates.
Common mistakes
- 1Publishing a collection-speed number without naming the starting event.
- 2Treating payment terms, expected receipt dates, observed intervals, and DSO as interchangeable.
- 3Assigning an invented receipt date to an open item so it enters the average.
- 4Using a historical average as a prediction for a specific customer payment.
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Measure the timing without turning it into a promise
Review completed collection intervals, keep expected and received cash distinct, and take the timing evidence into the wider cash plan.
Explore Collections Planning