Definition
Accounts payable is money you owe suppliers/vendors for invoices received but not yet paid. It affects cash timing.
Example
If you negotiate net-60 payment terms instead of net-30, you can improve short-term cash timing without changing total costs.
How to use it
- AP timing can extend runway, but don't damage vendor relationships or reliability.
- Match payment terms to your collections cycle where possible.
Measured as
Measure Accounts Payable (AP) with the same date, unit basis, and accounting or policy definitions used in the rest of your model.
Operator takeaway
- AP timing can extend runway, but don't damage vendor relationships or reliability.
- Match payment terms to your collections cycle where possible.
- Tie Accounts Payable (AP) to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
- Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.
Next decision
- Read Runway and burn: gross vs net burn, working capital, and cash levers if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Accounts Payable (AP) belongs in cash planning, valuation, or debt monitoring so the number is used in the right model.
Where to use this on MetricKit
Guides
- Runway and burn: gross vs net burn, working capital, and cash levers: A practical guide to runway: compute net burn, understand why cash differs from profit, and how working capital and collections change runway.
- Cash conversion cycle: turn working capital into runway: A practical guide to the cash conversion cycle (CCC): how AR/AP timing changes cash, how to reduce days outstanding, and why runway depends on working capital.