Payment Lag- The lag between purchase date and the date at which pay is due is known as term lag. The lag between the due date and the date on which the buyer actually pays is termed due lag,and lag between the purchase and actually payment dates is the pay lag.

Pay lag = term lag + due lag

To calculate the pay lag, you need to know the term lag and due lag.

The term lag is the period between the purchase date and the date on which payment is due. This is the time allowed to the buyer to make the payment.

The due lag is the delay between the due date and the actual date on which the buyer makes the payment. This can occur if the buyer fails to pay on time.

To calculate the pay lag, you simply add the term lag and due lag together.

For example, let's say the term lag is 30 days (the time given to the buyer to pay) and the due lag is 5 days (the delay in payment from the due date).

Pay lag = term lag + due lag
Pay lag = 30 days + 5 days
Pay lag = 35 days

Therefore, in this example, the pay lag is 35 days. This means the time between the purchase date and the actual payment date is 35 days.