AVERAGE TIME TO PAY SUPPLIERS

[alisonbrown]

Hi

Can anyone help me as to were I can find out the avaerage time it is taking me to pay my suppliers? I know how to do it for individual companies but not as a whole.

Any help would be appreciated. Thanks

[brucedenney]

Well....

There is no automatic way to do it and how do you want to calculate it?

The time you take to pay a supplier could be skewed by all sorts of things, you might have different terms with different suppliers, you might have a dispute and valid reason to hold off paying part of an invoice for a period.

If you have 2 suppliers and 1 of them is paid 2 days late and one of them is paid 2 days early then is the average 0?
What if the one that was paid late was a million pounds and the other one was a tenner?
What if it was the other way around?

Do you want to include all transactions from all time in the average, or are you interested in the average for the last rolling 12 months, or the average in this financial year or or or

I think you need to be clear what it is that you are trying to measure, then you can decide what the KPI (Key Performance Indicator) is and then you can work out how to calculate it from the data you have.

It is very easy to say, "the average creditor days" but when you come to think about it, there is a lot of scope to interpret what that actually means and you could produce a lot of different numbers all of which would be correct, depending on your definition.