Your sales team will tell you the customer always pays. Eventually. That word - eventually - is doing a lot of work. Accounts payable days (AP days) tells you exactly how long ‘eventually’ is - not from what the customer tells you, but from what their own balance sheet tells the government. Every company registered in India files annual financial statements with the Ministry of Corporate Affairs. Those filings are public. And buried inside them is a calculation that can save your credit team months of painful follow-up.
What Accounts Payable Days Actually Means
Accounts payable days (also called creditor days or payable days) is a measure of how long a company takes - on average - to pay the suppliers and vendors it owes money to. It is calculated from two numbers that every company must report in its annual accounts: trade payables (the amount owed to vendors at year end) and purchases (what the company bought from vendors during the year).
The formula is straightforward:
AP Days = (Trade Payables ÷ Cost of Purchases) × 365
- Trade Payables: Balance Sheet → Current Liabilities → Trade Payables
- Cost of Purchases: Profit & Loss → Purchases of Stock-in-Trade or Materials Consumed
- Both figures are in every MCA-filed annual report
If a company has ₹40 crore in trade payables and ₹200 crore in annual purchases, its AP days is 73 days. That means on average it takes 73 days to pay a vendor invoice after receiving goods or services. For a supplier extending 60-day credit terms, that number tells you something important: this customer is regularly paying late.
If your credit terms are 45 days and your customer’s AP days - calculated from their own accounts
- is 90 days, you already know payment will arrive late. The question is whether it is getting worse over time. A rising AP days trend, year after year, is the signal that the customer is under growing financial pressure - and stretching vendor payments to manage their own cash flow.
Why MCA Data Is More Honest Than What the Customer Tells You
When you ask a large customer about their payment terms or financial health, you get what they want you to hear. MCA filings are different. They are statutory documents audited by an independent chartered accountant and submitted under legal obligation to the government. A company cannot manipulate these the way they can manage a conversation.
What MCA annual returns give you access to, that you cannot get any other way:
Trade payables for the current year and prior year. You can see in one glance whether the amount owed to vendors has grown.
Purchases and cost of materials - the denominator you need to calculate AP days accurately over multiple years.
MCA filings go back several years. A 3-year AP days trend is far more revealing than any single data point.
Breakdowns of trade payables by age - dues outstanding for more than 45 days from MSMEs or more than 1 year from others - are now mandatory disclosures.
Together, these give you a picture of how the company treats its vendors - built from data they submitted to the government, not a sales pitch they gave you over a meeting.
How to Calculate Accounts Payable Days From MCA Data - Step by Step
You do not need a finance degree or a Bloomberg terminal to do this. Here is the exact process for pulling AP days from a company’s MCA filings.
Go to mca.gov.in and search for the company by name. Under the company’s filing history, find the most recent Annual Report or Financial Statements (Form AOC-4 or its XBRL equivalent). Download the last 2–3 years of filings if available.
Find Trade Payables in the Balance Sheet. Look under Current Liabilities. Trade Payables will be listed there - it is the amount the company owes to vendors as of the year-end date. Note the number for the current year and the prior year.
Find Purchases or Cost of Materials in the Profit & Loss statement. For a trading company, look for ‘Purchases of Stock-in-Trade.’ For a manufacturing company, look for ‘Cost of Raw Materials’ or ‘Materials Consumed.’ This is your denominator.
Apply the formula: (Trade Payables ÷ Purchases) × 365. Do this for each year you have data for. A table with 3 years of AP days tells you far more than a single number - you want to see the direction, not just the level.
Compare year over year. AP days going from 48 → 61 → 79 over three years is a serious signal even if the absolute number looks manageable. The direction is what tells you whether the pressure is building.
What the Numbers Tell You - and When to Be Concerned
There is no single AP days number that applies to every industry. A steel company may operate on 90-day cycles; an FMCG distributor may run on 30. What matters more than the absolute number is how it has changed over time, and how it compares to the credit terms you are extending.
One important note: AP days rising because a company’s business is growing fast - buying more, managing higher volumes - is different from AP days rising because cash is tight. Always read it alongside revenue growth and operating cash flow figures from the same filing. If revenue is growing but AP days is also rising steeply, that combination warrants a closer look.
The MSME Disclosure - A New Mandatory Signal You Should Not Miss
Starting from FY 2022-23, the Ministry of Corporate Affairs made it mandatory for companies to separately disclose the amount they owe to MSME vendors - and how long those amounts have been outstanding. This disclosure appears in the Notes to Accounts section of the annual report, specifically under the MSME Dues schedule.
This is highly useful for two reasons. First, it tells you whether the company treats small vendors differently from large ones - and most companies under cash pressure do. Second, it creates a legally verifiable paper trail of overdue amounts that the company itself has certified.
Find the line: ‘Principal amount remaining unpaid to MSME suppliers beyond the agreed period.’ If this number is large - or if it has grown year over year - it signals that the company is routinely delaying payments to smaller vendors. If you are a smaller supplier to this company, you are likely in the same queue.
You can cross-check this further using the MSME Samadhaan portal (samadhaan.msme.gov.in), where MSME vendors who have filed payment disputes against large companies are listed publicly. A company with multiple open disputes on that portal has a documented track record of delayed payments - not a theoretical risk.
Why Most Credit Teams Miss This Signal
The most common reason credit teams do not use AP days from MCA data is that no one set it up as part of the process. The data is free. It is publicly available. But it requires someone to go and get it - and that step gets skipped when the team is busy managing collections on current outstanding.
Three specific reasons this signal gets missed in Indian B2B companies:
Credit reviews happen after a payment problem appears, not before. By then, AP days data from the prior year already showed what was coming.
If the customer has paid on time for 2 years, the team assumes it will continue. Past payment history does not predict future behaviour when financial conditions change.
Many teams believe reading MCA filings requires an accountant. The AP days calculation needs only two numbers and a basic formula - it takes under 10 minutes per company.
Because MCA filings are annual, teams assume the data is too old. But a 3-year trend in AP days is a structural signal - it does not change month to month.
The most dangerous period for any supplier is when a customer has been paying well but their AP days have been silently rising for two years in their MCA filings. That gap between good recent payment behaviour and worsening financial structure is exactly where defaults develop - and exactly where MCA data gives you advance warning.
Combining AP Days With Other Public Signals
AP days is most powerful when used alongside other signals from the same MCA filing and from other public sources. On its own, a high AP days number raises a question. Combined with two or three other signals, it answers it.
From the Same MCA Filing
From the Same MCA Filing
Debt-to-equity ratio rising above 2x. High leverage combined with rising AP days means the company is borrowing more and also paying vendors more slowly - a classic double stress signal.
Operating cash flow turning negative. If a company is profitable on paper but its operations are consuming cash, vendors are usually the first to feel it through payment delays.
Auditor qualification or going concern note. When an auditor flags doubts about a company’s ability to continue as a going concern, it is a statutory warning. AP days rising in the same period makes it a serious red flag.
Revenue declining year-on-year. Falling revenue with rising AP days is particularly dangerous - it means both the business is shrinking and vendor payments are being delayed to conserve cash.
From Other Public Sources
From Other Public Sources
MSME Samadhaan disputes. Cross-check whether any of the company’s MSME vendors have filed payment complaints. Multiple open disputes confirm the AP days trend is a real collections behaviour, not a reporting anomaly.
DRT or NCLT filings. A case filed against the company in the Debt Recovery Tribunal or National Company Law Tribunal means lenders or other creditors have already escalated. This drastically changes the credit picture.
GST registration status. A company with active GST filing and stable turnover alongside a rising AP days trend is in a different risk category from one where GST turnover is also declining.
What This Looks Like in Practice
Consider a mid-sized manufacturer in Pune - a supplier’s largest customer, accounting for 30% of their revenue. The customer has always paid within 60–70 days, slightly beyond the 45-day credit terms, but the account manager says they are a strong relationship and have never defaulted.
Supplier A relies on the relationship and payment track record. No financial review is done. Credit limit is increased to support the customer’s growing order volumes.
Supplier B pulls the customer’s MCA filings and calculates AP days over three years: FY22 = 58 days, FY23 = 79 days, FY24 = 112 days. They also find the auditor noted ‘delays in repayment of statutory dues’ and MSME Samadhaan shows two open disputes. Supplier B puts the account on review, reduces credit limit, and moves to a 30% advance requirement on new orders.
Twelve months later, the customer requests a 3-month payment holiday citing a working capital crunch. Supplier A, sitting on a large and growing outstanding, has very little leverage. Supplier B, who reduced exposure months earlier, has a manageable position and uses the advance payments already collected to protect their balance.
The data that told Supplier B what was coming was in the public domain the whole time. The difference was whether anyone looked at it.
Accounts Payable Days Monitoring Built Into Your Large Customer Risk View
Privue extracts and tracks accounts payable days and related financial ratios from MCA-filed annual reports for your key accounts - automatically. Your credit team does not need to download filings and run calculations manually. Privue flags year-on-year AP days deterioration, cross-references it with MSME Samadhaan disputes and court records, and surfaces the combined signal in a single customer risk view. When something changes, your team is alerted - not left to discover it during a collections call.
What You Should Do Next
List your top 10 customers by outstanding balance or revenue contribution. These are the accounts where a payment problem would hurt most. Start with these.
Pull the last 3 years of MCA annual filings for each. Calculate AP days using the formula above. Build a simple table: company name, FY22 AP days, FY23 AP days, FY24 AP days, trend direction.
Flag any customer where AP days rose by more than 20 days over 2 years, or where AP days already exceeds your credit terms by 30+ days. These go into a credit review queue immediately.
For flagged accounts, check MSME Samadhaan and MCA for auditor qualifications and any court filings. Cross-referencing two or three signals tells you whether the AP days trend is a genuine problem or a sector-wide pattern.
Make this a structured annual exercise - not a one-time check. AP days should be reviewed for your top accounts every time new MCA filings are available, typically between September and December each year for the previous financial year.
The data is there. It has always been there. The only question is whether your process is designed to use it before a problem becomes a crisis.