Best practice is not to pay everything immediately, although if your P2P process is so broken that by the time an invoice is ready to pay, it’s late – in that case you’re beyond terms and overdue, so must pay right away. Not a position you want to be in.
Most terms in the U.S. are 30 days. And most organizations try to pay on time, but not early. I’m sure there must be someone at the bank that can discuss the value of holding onto cash. The two biggest considerations are 1) your cash flow and cash management (ensuring you have the cash needed to operate, and that the timing of your payments does not get ahead of the timing of your cash receipts); and 2) the value of cash on hand – in the unusually low interest-rate environment this is perhaps harder to grasp, though with large amounts, even fractional interest can be significant.
Here are some articles to read:
- Managing Cash Flow – The Importance of AP (note there are several references/links to other pieces within this piece to provide additional help)
- How Does AP Fit into the Cash Flow Picture? (see the subsection with the same title)
You might also want to see:
- Common Payment Terms
- Coming to Terms with Payment Terms
- See payment terms data in The State of Accounts Payable - 2015
- See “Scheduling Disbursements” in Benchmarks: Disbursements
I hope the above helps in getting you started.