How To Calculate Accounts Payable Turnover in Odoo ERP | Arithmix

Calculating accounts payable turnover is an important aspect of managing your business finances. It helps you understand how quickly you are paying your suppliers and vendors, and how efficiently you are managing your cash flow. In this article, we will discuss how to calculate accounts payable turnover and why it is valuable to do so.

What Is Accounts Payable Turnover?

Accounts payable turnover is a financial ratio that measures how many times a company pays off its accounts payable during a given period. It is calculated by dividing the total amount of purchases made on credit by the average accounts payable balance during the same period. The formula for accounts payable turnover is:

Accounts Payable Turnover = Total Credit Purchases / Average Accounts Payable Balance

The result of this calculation indicates how many times a company pays off its accounts payable in a year. A high accounts payable turnover ratio indicates that a company is paying off its suppliers quickly, while a low ratio indicates that a company is taking longer to pay off its debts.

When Is It Valuable To Calculate Accounts Payable Turnover?

Calculating accounts payable turnover is valuable for several reasons. Firstly, it helps you understand how efficiently you are managing your cash flow. If your accounts payable turnover ratio is high, it means that you are paying off your debts quickly and efficiently, which can help you maintain good relationships with your suppliers and vendors.

Secondly, accounts payable turnover can help you identify potential cash flow problems. If your accounts payable turnover ratio is low, it may indicate that you are taking too long to pay off your debts, which could lead to cash flow problems down the line.

Finally, calculating accounts payable turnover can help you benchmark your business against industry standards. By comparing your accounts payable turnover ratio to that of your competitors, you can gain insights into how efficiently you are managing your finances and identify areas for improvement.

In conclusion, calculating accounts payable turnover is an important aspect of managing your business finances. It helps you understand how quickly you are paying off your debts, how efficiently you are managing your cash flow, and how you compare to industry standards. By following the formula outlined in this article, you can easily calculate your accounts payable turnover and use the results to make informed decisions about your business finances.

How Do You Calculate Accounts Payable Turnover in Odoo ERP

Odoo ERP itself isn’t naturally geared towards letting you calculate complex metrics like Accounts Payable Turnover. As an alternative, teams typically use products like Arithmix to import data from Odoo ERP and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Odoo ERP, combine it with data from other systems, and create calculations like Accounts Payable Turnover.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Accounts Payable Turnover in Arithmix

Calculating metrics like Accounts Payable Turnover is simple in Arithmix. Once you've created your free account, you’ll be able to import your Odoo ERP data, and use it to create natural language formulas for metrics like Accounts Payable Turnover.

Arithmix is designed to give you the power to build any calculations you want on top of your Odoo ERP data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.