Glossary · Receivables metrics
Days payable outstanding (DPO)
Days payable outstanding (DPO) is how many days, on average, a business takes to pay its own suppliers. It is DSO seen from the buyer’s side.
DPO measures how long you hold on to cash before paying the bills you owe. A higher DPO means you pay more slowly, which keeps cash in the business for longer.
It matters to suppliers because your customer’s DPO is your DSO with that customer. Large companies that manage working capital aggressively push DPO up, and the cost lands on their suppliers as longer waits.
For your own business, DPO is one half of the cash conversion cycle. Paying suppliers later than customers pay you means your suppliers finance part of your work; the reverse means you finance theirs.
Formula
DPO = (accounts payable ÷ cost of sales in the period) × days in the period
Example
A company has €45,000 in accounts payable and €135,000 of cost of sales over 90 days. DPO = 45,000 ÷ 135,000 × 90 = 30 days.