Days Payable Outstanding

Period
The number of days of the DPO measurement period which can be quarterly, bi-yearly, or year. Purchases should reflect the same time period.

Purchases
Purchases refers to the cost for the materials purchased only. It excludes Cost of Goods Sold (COGS) which are the direct costs attributable to the production of the goods sold in a company. This amount includes the cost of the materials used in creating the good along with the direct labor costs used to produce the good. It excludes indirect expenses, such as distribution costs and sales force costs.

Payables
The value of Payables (outstanding short-term financial obligations to suppliers for goods and services the company has already received but not yet paid for).

Actual DPO Days
The actual number of days. DPO provides one measure of how long a business holds onto its cash.

Cost of Capital
This is also known as opportunity cost.

Target DPO
The target days payable outstanding (DPO) is the desired target you would like to achieve through improved invoice management and accounts payable processes and initiatives to help with better payable practices.

Enter your target number of Days Payable Outstanding.