IDEAS home Printed from https://ideas.repec.org/p/wes/weswpa/2022-003.html
   My bibliography  Save this paper

Measuring Retailers’ Timing of Payments to Suppliers in Good and Bad Economic Times

Author

Listed:
  • Martin Gosman

    (Department of Economics, Wesleyan University)

  • Aoife Reynolds

    (Department of Economics, Wesleyan University)

Abstract

Days’ purchases in accounts payable (DPAP) is introduced as a measure to reveal how long retailers take to pay suppliers for merchandise purchases. Data for the 2004-2019 period confirms conventional wisdom that large retailers increasingly delay payments, not so much out of economic necessity, but because they possess the power to do so. Accounts-payable stretching by apparel retailers in 2020 is compared to their stretching during the previous 15 years. This sector reported greatly diminished sales and cash from operations in 2020 as COVID sharply reduced consumer purchases. In response, apparel retailers delayed payments to a degree never seen before, with the larger firms increasing DPAPs by more in 2020 than during the prior 15 years. DPAP is seen to represent a useful financial measure to gauge the extent to which powerful retailers dictate payment terms to suppliers, in good and bad economic times.

Suggested Citation

  • Martin Gosman & Aoife Reynolds, 2022. "Measuring Retailers’ Timing of Payments to Suppliers in Good and Bad Economic Times," Wesleyan Economics Working Papers 2022-003, Wesleyan University, Department of Economics.
    • Handle: RePEc:wes:weswpa:2022-003
    as

    Download full text from publisher

    File URL: http://repec.wesleyan.edu/pdf/mgosman/2022003_gosman.pdf
    Download Restriction: no
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wes:weswpa:2022-003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Manolis Kaparakis (email available below). General contact details of provider: https://edirc.repec.org/data/edwesus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.