Measures how well the company’s payment terms align with those of its suppliers, impacting cash flow and supplier relationships.

What it Measures ?

Checks if payments are made as agreed with suppliers

Relevant StakeHolders 

Accounts Payable, Finance Teams

In-depth Use Case / Real-world Example

A manufacturing company producing circuit boards calculates Payment Terms Alignment by tracking the alignment of payment schedules with suppliers. For example, if the company has 30-day payment terms but most suppliers expect payment within 60 days, this misalignment could cause cash flow challenges. Ensuring that payment terms are mutually agreed upon and in sync with suppliers helps maintain strong relationships and improves financial management.