What is Days Payable Outstanding?
Average days taken to pay suppliers.
How to calculate it
Calculate Days Payable Outstanding as: (Accounts payable / COGS) × Days in period. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
$100k payables / $1.2M COGS x 365 = 30 days to pay suppliers.
Example 2
$100k of payables against $1.2M COGS over 365 days -> 30 days to pay suppliers, matching net-30 terms without straining relationships.
Why it matters
Days payable outstanding (DPO) is the average number of days taken to pay suppliers and, within limits, a higher DPO preserves cash. It is one of the three levers of the cash conversion cycle. Stretching payables too far can damage supplier relationships and forfeit early-payment discounts, so there is a balance to strike.
Benchmark context
Balance the cash benefit against supplier goodwill; align DPO with negotiated terms rather than maximizing it at relationships' expense.
Common pitfalls
Stretching payables can damage relationships.
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