average payment period

Definition

APP. The number of days a company takes to pay off credit purchases. It is calculated as accounts payable / (total annual purchases / 360).

Use this term in a sentence

You should always know how long your average payment period will be so that you can be prepared when the time comes.

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The average payment period was always the same and we were happy that nothing too unexpected happened with it, or we would get worried.

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My boss was angered to learn that our company's credit quality had suffered after our average payment period went up under the new accounts payable regime.

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average outstanding balance accounts payable turnover