What is my average payables days? Efficiency ratios are a great way of analysing the underlying operational efficiency of a business. Jazoodle assesses the efficiency of a company in a number of ways. Areas such as client revenue collection, or how effective its employees are in generating revenues and keeping costs at reasonable levels.
Average Payables Days (APD)
How do you measure the efficiency of people and processes within your organisation? The average payables days metric is a great way of doing this, and an indicator of company efficiency. Assess this over time and compare periods. In Jazoodle, we assess and compare ITT across financial years as well as on an individual monthly basis.
What does it mean?
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
How do we derive your APD?
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))
How Can I Improve my APD?
Your APD 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