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Measure how long you take to pay suppliers, and how much that funds the business.
DPO is the only working-capital lever that improves your cash position by using someone else's. Every day you hold a supplier invoice is a day of free financing — right up to the point where it stops being free and starts showing up as worse pricing, slower deliveries, or a supplier who prioritises someone more reliable.
Days payable outstanding
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Average days between receiving a supplier invoice and paying it.
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Your numbers
The formula
DPO = (Accounts payable ÷ COGS) × Days in period
Higher DPO frees cash — until it costs you price, priority or a supplier.
What it means
Accounts Payable — full definition
Read in the glossaryUse COGS rather than total purchases if you want the standard comparable figure; use purchases if you want the operationally accurate one for a stock-heavy business.
Average the payables balance across the period rather than using a month-end snapshot, which is often artificially low right after a payment run.
Compare DPO to your weighted average agreed terms — the gap tells you whether you are paying early, on time, or quietly late.
Rising DPO can mean disciplined payment management or an inability to pay. From the outside these look identical, which is why lenders read it alongside your cash balance.
Stretching payment past terms to hold cash can be a false economy where early-payment discounts exist. Check the annualised return before deciding.
Worked example
Payables of 320,000 against 2.4m of annual COGS gives daily COGS of 6,575 and a DPO of 48.7 days. If agreed terms average 60 days, you are paying about 11 days early — roughly 74,000 of cash handed over ahead of schedule for no negotiated benefit.
Close to your agreed terms. Materially below means you are financing suppliers for free; materially above means you are late, whatever the treasury policy calls it.
Only until suppliers reprice. Many quietly add a premium to customers who pay slowly, which costs more than the financing benefit is worth.
COGS is the conventional basis and makes external comparison possible. Purchases give a truer internal read when inventory is growing or shrinking fast.
This calculator works on one set of numbers. AWRA OpsHub keeps dpo calculator results current across every item, supplier and location — automatically.
See how many days your cash is trapped between paying suppliers and getting paid.
Measure how long customers take to pay — and what that delay costs in cash.
Decide whether taking 2/10 net 30 beats holding on to the cash.