Average payment time: This is an average, which is derived from the difference in number of days between the invoice accounting date and the payment date.
For instance:
Invoice | Accounting date | Due date | Amount | Payment date |
INV001 | 02/01/07 | 02/02/07 | 100 | 03/03/2007 |
INV002 | 03/01/07 | 03/02/07 | 200 | 03/03/2007 |
INV003 | 04/01/07 | 04/02/07 | 300 | - |
INV004 | 01/04/07 | 01/06/07 | 400 | - |
BP situation with a pivot date of 03.03.07 :
[(58 days*100)+( 57*200)] / 300 = 57,33 days is the average payment time.