Days of Payment

  • Days of Payment = (Short-Term Liabilities / (Purchases + Increases in Fixed Assets + Total Expenses – Depreciation)) * 365
  • It indicates on average after how many days the company pays its suppliers.

Business actions to improve the Index

  • Increase Short-Term Liabilities without increasing purchases but through extending credit
  • Reduce Purchases that are either without payment credit, or with little credit