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Days Payable Outstandingnoun · abbr.

The average number of days you take to pay suppliers.

DPO measures how long you hold onto cash after receiving goods or services. Higher DPO improves your cash position because suppliers are effectively financing you.

It has a ceiling. Stretching payments past agreed terms costs goodwill, forfeits early-payment discounts and eventually shows up as worse prices or shorter terms.

How it is calculated

DPO = (Accounts payable ÷ Purchases) × Days in period

Read alongside early-payment discount value before extending it further.

Also called

  • creditor days

Related terms

Accounts Payable

AP

Money your business owes to suppliers for goods or services received.

Payment Terms

The agreed timing and conditions for settling an invoice.

Early Payment Discount

A price reduction offered for settling an invoice ahead of terms.

Cash Conversion Cycle

CCC

How many days cash is tied up between paying suppliers and collecting from customers.

More in Accounting

Accounts Receivable (AR) Accrual Accounting Accrued Expense Aging Report Bad Debt Provision Balance Sheet Bank Reconciliation Break-Even Point

Days Payable Outstanding is not just a definition here

Accounting runs on this vocabulary every day in AWRA OpsHub — 51 of our 257 glossary terms describe things the platform actually does.

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