Business Accounts Payable Days

Sageworks
January 25, 2017
Read Time: min

What it is, how it’s calculated and why it’s important to small business owners.


Calculation

Accounts Payable Days = (Accounts Payable ÷ Cost of Goods Sold) × 365 Days


Definition

Accounts Payable Days is the amount of days until a business pays its suppliers and employees. It is calculated by taking the total amount of money a business owes to its suppliers and employees, dividing that by how much it costs to produce the goods sold (including material and labor costs) and then multiplying it by the number of days in the year.


How it is Used

Accounts Payable Days is useful in determining how efficient a company is in paying its vendors and employees.Typically, businesses aim to increase Accounts Payable Days as a way of maximizing the amount of cash they have on hand at any given point in time.

To benchmark Accounts Payable Days against others in your industry and learn how to generate more cash for your business, try our free cash flow solution, CashSage.

About the Author

Sageworks

Raleigh, N.C.-based Sageworks, a leading provider of lending, credit risk, and portfolio risk software that enables banks and credit unions to efficiently grow and improve the borrower experience, was founded in 1998. Using its platform, Sageworks analyzed over 11.5 million loans, aggregated the corresponding loan data, and created the largest real-time database of private-company financial information in the United States. The company was acquired in 2018 and is now part of Abrigo.

Full Bio

About Abrigo

Abrigo is a leading technology provider of compliance, credit risk, and lending solutions that community financial institutions use to manage risk and drive growth. Our software automates key processes — from anti-money laundering to fraud detection to lending solutions — empowering our customers by addressing their Enterprise Risk Management needs.

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