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Intro to "What is the Payment Index of your Company?"

What is the payment indicator publicly shown on the credit bureau of your company?


Try the What is the Payment Index of your Company? Calculator >


Payment Index of your Company The payment index shown publicly on the commercial credit report of your company is a weighted average of late days in which you pay your suppliers. It is a very good indicator of your company's paying habit and it allows future business partners to evaluate when they will get paid after supplying your business with goods and services. The statistic representing best the payment habit of businesses is normally the non financial trades, which implicates trades of goods and services used for daily operations and require suppliers to be paid in total every months. The financial trades, which include payment on credit cards, leasing and purchasing vehicles or equipment and long-term debt, are not included in the payment index.

The current period

Generally a supplier gives 30 days to a client before considering them late on their payment. This clemency period is the current period, but it differs between businesses, based on the industry. Businesses working in the food industry will demand to be paid earlier than 30 days because of the perishable nature of the goods, as opposed to businesses working in the steel industry, which will be satisfied with payments made in 90 days or less before having a client officially running late. If you go to the extreme, mega stores offering the most competitive prices for consumers will require to pay their suppliers in 120 days before being considered late; an advantage they exploit due to their status. Normally the most imposing businesses decide on the payment term to the suppliers.

The past due periods

After the current period, every bracket of 30 days is a new past due period.

  • 1st past due period: 1-30 days after the current period
  • 2nd past due period: 31-60 days after the current period
  • 3rd past due period: 61-90 days after the current period

Note that the current period differ between companies, and that the payment index do not indicates the average of days after billing, but only the average of days after the current period is over. For example, if a supplier allows 15 days of current period and the payment index of the business shows 20 days past due, 35 days in total has past since it was billed. If the current period is 40 days, 60 days has past after the billing. That way, we isolate the late days and can compare them between different suppliers.

The result

The payment index scale ranges between 0 and 100 days past due. 0 day past due means that a company is paying all of its account on time, while 100 days past due shows that a business pays its account after 91 days past due or simply doesn't pay and is considered irrecoverable by its suppliers. In average, most businesses have a payment index under 30 days, which is 60 days after the billing, considering a current period of 30 days. Businesses with more than 30 days late as a payment index start to show signs of difficulties, and in the case of 91 days and up (121 days late and more for the same current period of 30 days), the amount owed is put in the doubtful account.

What is important for your commercial credit report, beside a reasonable payment index, is the trend of payment of the last few months. Is the business stable with their payment habits or is starting to pay later? Companies starting to pay late might be a warning sign for cash flow problems.

If you want to look good in front of future lenders and suppliers, here are a few tips to improve your payment index on your credit bureau:

  • Bring, as much as possible, your account close to the current account
  • Avoid at all cost having amounts in the third past due period
  • Keep an important amount of references, in preference good, reported to the credit bureau

The following is a calculator that evaluates the payment index of your company publicly shown on the credit bureau. You just have to insert the appropriate period for the balance of the non financial trades. You can also play with the amount to see how fluctuations impact your score and then efficiently adjust your average.


Try the What is the Payment Index of your Company? Calculator >

Numbers in our calculators are rounded to two decimals.
The same calculations made in an Excel spreadsheet may differ slightly.

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