Payback

Formal

A simple measure, usually related to cash flow, of the time taken to recover any investment or spend in terms of years and months. Eg Day 1 Spend $100 Day 30 Receive $50 Day 60 Receive $50 Day 90 Receive $50 Payback = 60 days because that is the point in time at which the original $100 spend was recovered.

Real-world Example

A $50,000 investment in new equipment saves the business $10,000 a year in labour costs. The payback period is 5 years - the time it takes for the savings to equal the original outlay.