Payables payment period
The payables payment period estimates how long a business takes to pay its trade suppliers. A usual calculation is trade payables divided by annual credit purchases, multiplied by 365 days. Average payables may be used if available. Cost of sales is sometimes used as a disclosed approximation when credit purchases are unavailable. Interpret the result alongside supplier terms and cash-flow circumstances.
Worked example
Average trade payables are $12,000 and annual credit purchases are $146,000. The period is $12,000 / $146,000 × 365 = 30 days. Against agreed 30-day terms this suggests payment approximately on time, subject to seasonal effects.
Common mistake
Longer payment periods may preserve cash but can signal distress or damage supplier relationships. Revenue is not the denominator.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Supporting | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| CIMA | F1 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: payables days, trade payables payment period