What do you mean by the company's payable cycle?
It is the time required by the company to pay all its account payables.
Apart from this understanding, it is important to define this in the context of financial management, which will be helpful when preparing for ap interview questions.
You could describe the process step-by-step, from invoice processing to supplier payment.
Also discuss the payable cycle in managing the company’s cash flow, working capital, and vendor relationships.
Sample Answer : “The company’s payable cycle refers to the series of activities involved in managing and processing payments to suppliers for goods or services received. It represents the time frame between the acquisition of goods or services and the actual payment made to the suppliers.
Let me also explain how it works.
The payable cycle starts with the company’s purchase of goods or services from suppliers on credit. After receiving the goods or services, the company verifies the accuracy and quality of the delivered items. An invoice is generated by the supplier, indicating the amount owed and the payment terms.
The company then reviews and approves the invoice for payment. Depending on the agreed-upon credit terms, the payment is scheduled for a specific period, such as 30 days or 60 days. During this time, the company’s accounts payable department maintains a record of outstanding payables, keeping track of due dates and ensuring timely payments.
The company’s payable cycle impacts the company’s cash flow by influencing the timing of cash outflows for payments. It also provides valuable data for financial planning and budgeting.”
