Creditor days

Definition

Creditor days = (trade creditors ÷ annual purchases) × 365. It is the mirror of debtor days, showing how long you take to pay suppliers. Sensible use lengthens the cash you hold; abuse damages supplier goodwill.

In plain terms

It is how long you take to pay your bills. Taking fair terms keeps cash working in your business a little longer, but stretching suppliers too far risks supply and discounts.

Why it matters for your company

Balancing creditor days against debtor days shapes your working-capital cycle. Use the creditor days calculator.

In practice

For a UK limited company, creditor days show up as a habit: how promptly the accounts team clears supplier invoices once terms allow. A director who negotiates fair, longer terms with a key supplier and then actually uses that full window keeps cash sitting in the business rather than out the door early, without breaching any agreement.

The pattern is usually inconsistent across a supplier base rather than uniform. Some suppliers get paid close to the due date because the relationship matters or discounts are on offer for prompt payment; others are paid nearer the end of terms because the cash is more useful staying put a little longer. Watching how creditor days drifts over several periods, alongside debtor days, tells a director more than a single snapshot does.

Common pitfalls

The most common mistake is treating creditor days purely as a cash lever and pushing it out regardless of agreed terms. Persistently paying beyond what was agreed strains supplier goodwill, can trigger stricter terms or upfront payment demands in future, and, for a limited company with a concentrated supplier base, creates real operational risk if a key supplier tightens the relationship.

Another pitfall is reading the figure in isolation. A rising creditor-days number can look like better cash discipline, but if debtor days are rising in step, or stock is building faster than it is sold, the improvement is illusory: the working-capital cycle as a whole may not have improved at all.