Days Payable Outstanding (DPO)
Also known as: DPO
Days payable outstanding (DPO) is the average number of days a company takes to pay its suppliers after receiving an invoice.
DPO measures how long a business holds onto cash before settling supplier bills. A higher DPO means the company retains cash longer, improving working capital — but pushed too far it can strain supplier relationships and risk losing early-payment discounts or preferential treatment.
Procurement and finance manage DPO deliberately: negotiating longer credit terms raises it, while capturing early-payment discounts lowers it. The right level balances cash-flow benefit against supplier goodwill and financing economics.
Frequently asked questions
- What is days payable outstanding?
- DPO is the average number of days a company takes to pay its suppliers after invoicing. A higher DPO means the company holds cash longer.
- Is a higher DPO better?
- Up to a point — it improves working capital by retaining cash longer. Pushed too far it can damage supplier relationships and forfeit early-payment discounts.
Related terms
Working Capital
Working capital is the money a business has available for day-to-day operations, calculated as current assets minus current liabilities.
Read definitionCredit Terms
Credit terms are the conditions under which a supplier allows a buyer to pay for goods after delivery, rather than upfront — for example, payment within 30 days.
Read definitionAccounts Payable (AP)
Accounts payable (AP) is the money an organisation owes its suppliers for goods and services received but not yet paid for, and the team that manages those payments.
Read definitionExplore related across the knowledge graph
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