What is Settlement cycle (T+n)?

What T+n means

T is the trigger date, the event from which the clock starts. n is the number of days, usually working days, after which the money is paid. The trigger matters as much as n:

• Payment gateways usually count from the day the customer pays (the transaction date).
• Marketplaces usually count from dispatch or delivery, and some wait until the return window has passed for certain categories.
• Couriers remitting COD count from delivery, and pay on fixed days of the week.

A cycle may also be weekly or fortnightly, so an order can wait several extra days for the next payout date.

Why it matters

Every day in the settlement cycle is a day your money is with someone else. It adds to the collection days in your cash conversion cycle, and the amount waiting grows with sales. A business growing fast on a slow-settling channel can run short of cash while its sales and profits look healthy.

What changes the cycle

• Seller programmes and performance: some marketplaces pay faster to sellers with good ratings or in certain programmes.
• Reserves: an amount held back for returns or claims, often for new sellers, or after a spike in returns or disputes.
• Account issues: incomplete KYC, bank details or tax details can hold payouts.
• Holidays: payouts falling on a bank holiday move to the next working day.
• Faster payout options: some gateways and couriers offer earlier settlement for a fee.

Using it in planning

1. Write down each channel's trigger, n and payout days from your agreements and seller dashboards.
2. Forecast cash receipts from expected delivered sales on each channel, shifted by its cycle, after expected returns and fees.
3. Watch the ageing of amounts not yet settled. Orders older than the cycle that are still unpaid need a ticket.

A short cycle is worth money. When comparing channels with similar margins, the one that pays sooner needs less working capital to grow.