Page 18 - FINAL CFA I SLIDES JUNE 2019 DAY 11
P. 18
Session Unit 11:
Accounts Payable Management, p. 89 38. Working Capital Management
Pay too early = cash is used unnecessarily and interest on it is sacrificed.
Pay too late = damage supplier relationships = more restrictive credit terms or even payment
requirement plus high interest. tanties
Typical terms: “2/10 net 60” = pay invoice within 10 days and get 2% discount, otherwise take
your time -60 days!
The cost to the company of not taking the discount can be annualized rate:
