Payment days are the average number of days that pass between receiving an invoice and paying it.

It is not a simple estimate; it is calculated with a financial formula:

=(Accounts_payable_balance*360)/(Total entries to accounts payable*12)

Make sure you read the definitions of accounts receivable and accounts payable.

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Bplans GlossaryBplans Glossary

At Bplans, it's our goal to make it easy for you to start and run your business. The Bplans glossary of common business terms will help you learn about key small business and entrepreneurship topics.