Business Glossary
What Are Creditor Days?
Creditor days measures how long a business takes to pay suppliers after receiving invoices. It is the counterpart to debtor days and a key lever in working capital management — longer creditor days means more cash stays in the business.
The Formula
Creditor Days = (Outstanding Creditors ÷ Annual COGS) × 365
Worked Example — UK SME
A UK retailer: annual COGS £290,000, outstanding creditors £38,000. Creditor days = (38,000 ÷ 290,000) × 365 = 47.8 days. The business takes approximately 48 days to pay suppliers.
UK Benchmark
📊 Most UK SMEs run 30–60 days depending on agreed terms. Stretching beyond agreed limits damages relationships. Negotiate longer terms formally.
Common Questions
Is it good to have high creditor days?
Not if it exceeds agreed terms. Paying late damages relationships and can result in credit withdrawal. Negotiate longer terms formally, then pay on time.
What is the cash conversion cycle?
Debtor Days minus Creditor Days. If you collect in 42 days and pay in 35 days, your cycle is 7 days — you need 7 days of working capital to bridge the gap.
How do I negotiate better payment terms?
Build on volume and reliability. Offer direct debit payment. Ask for 45 or 60-day terms when placing significant orders.
Related terms