Average Days to Pay
- Stephen Juliano (Unlicensed)
- Colleen Juliano
- Stephen Juliano
Overview
In the management of your company’s cash flow it is far more advantageous to be proactive than reactive. A good litmus test to the stability of your cash flow is to follow the payment trends of your customers. The average days to pay report will allow you to see how long it has taken your customers to pay you on average per invoice of over the last six months. If you can spot a trend of your biggest customers taking longer to pay you may be able to foresee a general slowdown in your industry before it is obvious and in some cases too late and react accordingly.
The average days to pay report lists the average amount of time in days a customer has taken to pay invoices over the previous 6 months. Only invoices that were actually paid in full are factored into this report. If an invoice was partially paid, the length of time used in the average calculation is the difference between the invoice date and the date it was eventually paid in full. In other words, partial payments do not count for this report
The Monthly Average at the end of the report is an average of the actual invoices, not an average of the averages printed on the report.
In this example there were several invoices paid in full in august and again in October. On average all the invoices in October had been open for 262 days. However the at the time the invoices were paid in august they were open for an average of 76.50 days. This is used to alert you that it is now taking A Flower to Keep longer to pay its bills and they may be experiencing cash flow issues that need to be taken into consideration.