All 21 Payment Runs questions
More in Payment Runs
What is the difference between ACH, wire, and check payments in terms of risk and cost? How does a purchasing card (P-card) program change AP payment processing? What is a virtual card and why do companies use it for payments? How are payment holds and blocks managed within the run process? What is positive pay and how does it prevent payment fraud? How are cross-border/foreign-currency payments handled in a payment run? How do you reconcile a payment run to the bank and the ledger? How does AP interact with treasury and cash forecasting around payment runs? How do you prevent and detect duplicate payments across payment runs?
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Accounts Payable & Receivable › Payment Runs

How do payment runs support cash flow and working capital management?

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Answer

By timing runs to due dates (not earlier than necessary) while capturing worthwhile discounts, AP optimizes days payable outstanding and preserves cash. Aligning runs with the cash forecast, staggering large payments, and using tools like dynamic discounting let treasury balance liquidity, financing cost, and supplier goodwill.
DPO = (Accounts Payable / COGS) x 365.
Paying on due date rather than early raises DPO, freeing working capital.
Real-world example Shifting from paying on receipt to paying on the due date lifts DPO by 12 days and frees several million in working capital.

Common follow-ups: How is DPO calculated? | What's the risk of stretching payments too far?

Credit Control Aging Analysis Payment Runs
All 21 Payment Runs questions