Creditor Days: how long a company takes to pay its own suppliers
What creditor days means
We’ve covered how long stock sits before it sells (Inventory Days) and how long customers take to pay (Debtor Days). Creditor Days — also called Days Payable Outstanding (DPO), or payable days — flips the debtor-days question around: how many days does the company itself take to pay its suppliers?
Trade payables — money the company owes suppliers but hasn’t paid yet — is a liability on the balance sheet. It’s effectively free, short-term financing: the longer a company can hold onto that cash before paying suppliers, the less of its own working capital it needs.
The formula
Creditor Days = Trade Payables / COGS × 365
Worked example: Desi Bites Foods, FY25
| ₹ Lakh | |
|---|---|
| Trade payables (FY25 closing) | 185 |
| COGS (FY25) | 1607 |
| Creditor Days | 42 days |
Worked example: Britannia Industries, FY25
From Britannia Industries’ audited consolidated FY25 results (year ended 31 March 2025, filed 8 May 2025). For illustration only.
| ₹ Crore | |
|---|---|
| Trade payables (FY25 closing) | 1752.23 |
| COGS (FY25) | 10604.05 |
| Creditor Days | 60.3 days |
Britannia holds onto supplier cash for 60.3 days, versus Desi Bites’
- Paired with what we just saw on debtor days — Britannia collects from customers in under 10 days but pays suppliers in 60 — that gap is the whole story the next post, Cash Conversion Cycle, is built to measure.
🧒 Explain it like I'm 10 (optional — skip if this is already clear)
If your local kirana store buys biscuits from a distributor on credit and doesn’t have to pay for 60 days, but sells those same biscuits to customers for cash on day one — the store gets to use the distributor’s money, interest-free, for almost two months before it has to pay it back. That’s exactly what a company with high creditor days is doing, just at a much bigger scale.
Common mistakes
- Assuming high creditor days is always a sign of negotiating strength. It usually is, for a large, established company with real leverage over its suppliers. But for a smaller or struggling company, unusually high (or suddenly rising) creditor days can instead mean it’s delaying payments because it’s short on cash — the same number, two very different stories.
- Ignoring the impact on supplier relationships. Stretching payment terms too aggressively can strain supplier relationships over time, even if it looks efficient on a single year’s balance sheet.
- Mixing trade payables with other current liabilities. Only money owed specifically to suppliers for goods/services belongs in this ratio — lumping in other short-term liabilities (like accrued expenses) distorts it.
- Comparing creditor days across industries with very different supplier relationships. A manufacturer buying raw materials on 60-day terms and a services business with almost no physical suppliers aren’t comparable on this ratio at all.
Takeaway: creditor days measures how long a company effectively borrows from its own suppliers for free — a high number for an established company with real bargaining power is a genuine strength, but the same number for a cash-strapped company can be a warning sign instead.
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