Definition: total spend on overheads and COGS related to Accounts payable amounts and averaged out. For monthly figures, we use the change in accounts payables amounts

This measure assesses how efficient your supplier payment policies and practices are. Check for changes over time plus also ensure this figure is not less than your average receivables period.

Check your average payables days with Jazoodle now

Definition used:

Your APD is derived by:

Annual: 365 divided by (Total Cost Of Goods Sold + Total Expenses) divided by Total Accounts Payable)

Monthly: (365/12)/((Total Cost of Goods Sold Current Month + Total Expenses Current Month) Divided by (Total Accounts Payable – Total Accounts Payable Current Month))

Your Average Payables Days can be improved in a number of ways, including:

• Communicate clear supplier account terms
• Implement a solid payments policy
• Agree long credit terms with your supplier
• Implement staff training to ensure policy adherence