Analytics
Payment Terms
The Payment Terms tab analyzes vendor payment timelines and contractual terms. It supports cash-flow optimization by highlighting late payments and surfacing opportunities to renegotiate terms to better align with organizational goals.
🎯 Purpose
This dashboard focuses on liquidity and payment discipline by answering:
- Timelines: What are the average payment timelines across the organization?
- Compliance: Which vendors are being paid late, and why?
- Optimization: Where can we improve cash-flow by extending or standardizing terms?
🛠️ What You Can Do
| Action | Description |
|---|---|
| Review payment timelines | Analyze average days-to-pay across various vendors and categories. |
| Identify unfavorable terms | Find vendors with short payment cycles that may negatively impact cash-flow. |
| Spot late payments | Highlight specific transactions paid after the agreed contractual due dates. |
| Support negotiations | Gather evidence-based data for payment term renegotiation sessions. |
| Optimize cash-flow | Identify specific opportunities to extend or align payment cycles across the supply base. |
📊 Key Metrics
The Payment Terms tab typically features the following data points:
- Average Days to Pay: The mean timeline between invoice receipt and final payment.
- Payment Term Distribution: A breakdown of terms across the dataset (e.g., Net 30, Net 45, Net 60).
- On-time vs. Late Payments: A compliance metric showing the percentage of payments meeting contractual terms.
- Vendor Term Comparison: Side-by-side analysis to identify inconsistencies across similar suppliers.
🔄 Recommended Workflow
To effectively manage your payment strategy, follow these steps:
- Review Summaries: Start with the payment timeline summary to understand the global average.
- Flag Short Terms: Identify high-spend vendors with significantly shorter payment terms than the company standard.
- Audit Compliance: Analyze late payment patterns to determine if they are caused by process bottlenecks or liquidity issues.
- Strategize: Flag high-impact vendors for term renegotiation during upcoming contract renewals.
- Monitor Results: Track changes in the "Average Days to Pay" metric after implementing new payment strategies.
💡 Tips for Success
- Pareto Focus: Always focus on high-spend vendors first for the most significant impact on working capital.
- Process vs. Term: Distinguish between a bad contractual term (Net 15) and a bad process (Net 30 paid in 45 days).
- Supplier Reviews: Bring these metrics into vendor review meetings to discuss payment discipline and term alignment.
- Holistic View: Combine these insights with the Vendor Overview for a 360-degree supplier analysis.
Next Step: Ready to analyze your supply base holistically? Move to the Vendor Overview Guide.