2 min read
Definition
Days payable outstanding (DPO) is the average number of days a business takes to pay its suppliers. It is another name for creditor days, and a longer DPO — paid fairly, within terms — keeps cash in the business for longer.
In plain terms
A DPO of 40 means you pay suppliers, on average, 40 days after the invoice. Stretching this fairly funds part of your working capital for free; stretching it beyond agreed terms damages supplier relationships and supply.
Why it matters
DPO is the creditor leg of the cash conversion cycle and the one most within your control. The art is taking the full agreed term without ever paying late. See supplier payment terms and cash flow.
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