For example, if the transaction includes three cash receipts for an invoice of $400, the receipts might be laid out as follows:

• $100 is paid seven days from the invoice date.
• $200 is paid 14 days from the invoice date.
• $100 is paid 21 days from the invoice date.

The formula for calculating the average days to pay for all three invoices works as follows:

{(100 x 7) + (200 x 14) + (100 x 21)} / 400 = 14 days

Note: Negative invoice amounts will not be included in the payment days calculation.