Days Payable Outstanding (DPO)
Short answer
DPO is the average number of days you take to pay your suppliers.
Formula
DPO = (Accounts Payable / COGS) × 365
Take accounts payable, divide by annual cost of goods sold, multiply by 365.
Why it matters
DPO is the only part of the cash conversion cycle you can stretch in your favor. Healthy DPO means using supplier credit terms strategically. Too-high DPO damages relationships and credit ratings.
Benchmarks
People also ask
Common questions about Days Payable Outstanding (DPO)
What is Days Payable Outstanding (DPO)?+
DPO is the average number of days you take to pay your suppliers.
How is Days Payable Outstanding (DPO) calculated?+
Take accounts payable, divide by annual cost of goods sold, multiply by 365.
What is a good Days Payable Outstanding (DPO)?+
A healthy days payable outstanding (dpo) is typically around 45–60 days — negotiation strength. Specific targets vary by industry and stage; check our benchmarks above for your sector.
Why does Days Payable Outstanding (DPO) matter?+
DPO is the only part of the cash conversion cycle you can stretch in your favor. Healthy DPO means using supplier credit terms strategically.
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