A/R Lag The Accounts Receivable Lag (in days) is the time between customers receiving products and when they are expected to pay for them. If companies offer no credit terms, demand falls to about 60% of normal. At 30 days, demand is 93%. At 60 days, demand is 99.3%. At 90 days, demand is 100%. The longer the lag, the more your cash is tied up in receivables. Take note of the Unit Sales Forecast numbers as the A/R Days are adjusted. Increasing the days creates more favorable terms for the purchaser, and the forecast increases.

A/P Lag The Accounts Payable Lag (in days) is the time between companies receiving material and when they are expected to pay for it. Increasing the lag improves your cash position since you are in effect getting a loan from your creditors. Suppliers get upset as the lag increases and withhold material for production. At 30 days, they withhold 1%. At 60 days they withhold 8%. At 90 days they withhold 26%. At 120 days, they withhold 63%. At 150 days, they withhold all of your material. Take note of the Production After Adj. numbers in the Production area. Increasing the A/P days creates less favorable terms for suppliers, and the Production After Adj. number falls.