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Your customer's average payment delay

Nolwenn Launay
  • Updated

What is the Average Payment Delay, and how is it calculated?

Initial calculation

The average payment delay is a metric calculated for each customer. It is visible on the Customers list view and the Customer details page and is used as part of the customer rating (A,B,C,D).

 

The delay is calculated as the difference between the paid date and due date, weighted by the invoice amount.

Remember that we are using the DUE date. If an invoice is paid early, this could result in a negative value.

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🧮 Calculation

👇 Example

  • An invoice's payment delay is the time elapsed between its due date and its payment.

  • The average payment delay for a batch of invoices is obtained by

    • Multiplying the amount of each invoice by its payment delay

    • Adding up all the results

    • Dividing the total by the sum of all invoices' total amount

 

Let's imagine a customer with three invoices

  • Invoice #1: $140, paid within 7 days

  • Invoice #2: $85, paid within 55 days

  • Invoice #3: $214, overdue

💡 Invoice 3 is not taken into consideration

((140 * 7) + (85 * 55)) / (140 + 85)
= (980 + 4675) / 225
= 5655 / 225
= 25

With their invoices paid within 25 days (on average), this customer earns an A rating.

 

New calculation (to be enabled)

As explained above, historically at Upflow, the average payment delay has been computed using PAID invoices only. We offer an alternative feature that changes this behavior if enabled and does the following:

  • Include PAID, OVERDUE , DISPUTED invoices in the calculation
  • For OVERDUE and DISPUTED invoices, use today() date to calculate the delay (since there is no paidAt date)
  • Recompute this once every 24h, for all relevant customers

To resume:

  Feature = OFF Feature = ON
Invoice statuses PAID PAID, OVERDUE , DISPUTED
Partial payments Ignored Included as OVERDUE, we use today rather than paidAt to calculate the delay
Frequency On invoice payment Once every 24h
(at 12:00 UTC + 2hours)

 

 

How does the Average Payment Delay relate to Customer Rating?

We use the delay to calculate the rating according to the following rules. Note that the boundaries are inclusive, so A is up to and including 30 days.

Rating Delay
A ≤ 30 days
B ≤ 60 days
C ≤ 90 days
D ≥ 91 days

 

Missing/empty average payment delay

If the above-mentioned feature isn't enabled, the average payment time does not appear in the client’s file because we have not yet received a payment from them.

 

Once we have received their first payment, this field will be calculated automatically.

 

If the feature is enabled, you should see a number under this section. If you don't, or aren't sure if it's enabled, contact our Support team. 👇

 

Do you have any questions? Don’t hesitate to contact us!

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