Days Payable Outstanding

Days Payable Outstanding

The average amount of time it takes a company to pay its accounts payable. A company's accounts payable are short-term liabilities resulting from purchases the company has made on credit. Days payable outstanding is calculated thusly:

DPO = (accounts payable / cost of sales) * number of days.
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References in periodicals archive ?
While days sales outstanding and days payable outstanding improved only slightly, days inventory on hand showed no change at all.
Balancing financial settlement and inventory levels remain key concerns: two new studies indicate that successful innovators in inventory control and banking will gain market share as supply chain disruption is addressed
The AP Management Dashboard will be packed with drill-down reports, allowing AP management to view KPIs such as days payable outstanding (DPO), invoice processing efficiency by period, and invoices processed by type.
Corcentric to Release COR360 Version 10.2.0, Featuring New Accounts Payable Management Dashboard
Morgan's executive director--Treasury Services Advisory LATAM, highlighted efforts by his firm to help clients reduce their days sales and days payable outstanding levels.
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While there is obviously additional cost and administrative effort for the UK importer in providing this, the very fact it is putting forward a secure payment vehicle may enable the company to negotiate a marginal reduction in the unit price of the goods purchased, or increase their days payable outstanding, and thus their working capital position, by requesting additional credit terms on the strength of the LC.
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Treasury professionals typically manage working capital through days payable outstanding (DPO) and by optimizing the use of cash.
Working capital management: driving additional value within AP; Treasurers typically face the dilemma of trying to balance early payment discounts with maximizing float from short-term cash. Adding a purchasing card settlement capability within an EIPP program can be a major help
The Trade Payables program increases Days Payable Outstanding thereby creating "free working capital.
Trade finance product enables credit managers to effectively manage DSO, credit risk and cash flow
We instilled a 'days' mentality," Wang says, "heightening awareness throughout the company of the days it takes to convert inventory into sales and of the gap between days sales outstanding and days payable outstanding.
Attacking cash conversion: Kimberly-Clark
Aberdeen also has identified four key performance criteria to distinguish Best-in-Class companies related to SCF: (1) average cash conversion cycle; (2) relative improvement in the cash conversion cycle over the past year; (3) Days Payable Outstanding (DPOs); and Days Sales Outstanding (DSOs).
Supply chain finance: the next big opportunity: many companies have become expert at managing the physical flow of their supply chain. The next big challenge--and opportunity--is to focus on the financial side of the supply chain equation
SCF presents the opportunity to optimize working capital, largely in the context of extending payment terms, thus increasing days payable outstanding (DPOs).
Spotlight shifts to money in the supply chain
If you see a large source of cash from the change in accounts payable on the cash flow from operating act ivity, you might see an increase in days payable outstanding when you calculate the balance sheet ratios.
The Cash Movement of Operating Activity
And finally, days payable outstanding (DPO) and working capital will improve as customers won't have reason to hold payment.
Do's and don't's for good cash management: a consultant offers a list of thoughtful and useful ideas for reducing working capital and improving internal efficiencies

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