Creditor days, also known as days payable outstanding (DPO), measures how long your business takes to pay its suppliers, on average. It’s an important metric because it provides a general gauge of how your business manages supplier payments and cash flow.
An increasing creditor days figure may indicate that your business is taking longer to pay its bills. This can improve short-term cash flow. However, it could also signal payment delays or supplier pressure.
Formula: Creditor Days = (Average Trade Creditors ÷ Cost of Goods Sold) × Number of Days in Period
How to use the calculator
Enter the following information to calculate your creditor days:
- Average Trade Creditors: Use trade creditors from the balance sheet. Add trade creditors at the beginning and end of the period, then divide by two.
- Cost of Goods Sold: Use cost of goods sold from the income statement for the same period.
- Number of Days in the Period: Typically a month, quarter, or year.
| Average Trade Creditors | A$ |
| Cost of Goods Sold | A$ |
| Number of Days in Period | |
| Creditor Days | 45.6 days |
Creditor days should be evaluated in context. Higher creditor days can help preserve cash and may improve your cash conversion cycle. However, higher creditor days should also be balanced against supplier payment terms, early-payment discounts, and vendor relationships. The goal is to manage payments in a way that supports cash flow without creating supplier pressure.
Note: This calculator is for educational purposes only and not intended as financial advice. Please consult a professional if you require financial advice.
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Marco Terry is the Managing Director of Commercial Capital LLC and has over two decades of experience in asset-based finance. He has worked with small and mid-sized companies across the United States, Canada, and Australia. Marco holds a Master of Science in Finance.