Supplier Credit Days Calculator (Payables and Cash Gap)
Works out how many days you take to pay suppliers from your average payables and cost of goods, then compares it with your collection days.
Recent
Formula
How the calculation works
The tool divides the average payables by the yearly cost of goods to find the share of a year you owe suppliers.
It multiplies that share by 365 days to return the number of days of supplier credit you actually use.
It subtracts your collection days from the credit days to show whether the cash gap is positive or negative.
Common mistakes
- Using the year-end payable balance instead of the average, which distorts the days when trade swings through the year.
- Forgetting that a longer credit period often comes with a higher price, which quietly raises the cost of goods.
When to use it
- See whether your supplier terms give you enough days to cover the time customers take to pay.
- Negotiate longer credit when the cash gap is negative and you are funding the gap yourself.
Worked example
Average payables of 200000 taka and a yearly cost of goods of 1200000 give 60.8 credit days, so collecting in 45 days leaves a positive cash gap of 15.8 days.
Common questions
What does a positive cash gap mean?
A positive gap means supplier credit is longer than your collection period, so you hold the cash for those extra days.
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