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DPO calculator: how long you take to pay suppliers
Enter your average accounts payable and your yearly cost of goods sold. You get DPO, your daily purchase run rate and the cash released by asking for extra days.
Days payable outstanding is average accounts payable divided by cost of goods sold, times the days in the period. At the default numbers DPO is 38.5 days, and each extra day of terms frees USD 9,863.
Written by Procurement VMS Editorial Team · Reviewed by Michael, Procurement Advisor Expert · Updated
Your numbers
The boxes start with an example so you can see how it works. Replace them with your own figures.
Your result
On average you pay suppliers 38.5 days after receiving goods or invoices. Moving terms by 10 days would release about USD 98,630 in cash, once.
| Days payable outstanding | 38.5 days |
|---|---|
| Purchases per day | USD 9,863 |
| Cash released by the extra days | USD 98,630 |
| DPO after the extra days | 48.5 days |
The currency box changes the label only. Enter amounts in the currency you choose.
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How the DPO calculator works
The formula
DPO = (average accounts payable / cost of goods sold) x number of days. Cash released = daily purchases x extra days.
DPO measures how long cash stays with you before it goes to suppliers. A higher figure helps your cash position, as long as you are paying within agreed terms and not just paying late.
The release of cash is a one-time effect. If you move from 30 to 40 day terms, you receive ten days of purchases as extra cash once, then the new terms hold. The net 30 and payment terms guides cover how terms work in contracts.
The example numbers are illustrative and are not benchmarks. Use your own data for any decision.
How to use it with your own data
- Use the average payable balance over the period, not the year-end figure, which may be distorted.
- Match cost of goods sold to the same period and use the same number of days.
- Compare DPO with your standard terms. A figure well above them signals late payment, and well below signals that you pay early.
Mistakes that skew the answer
Using revenue in place of cost of goods sold
Payables relate to what you buy, not what you sell. Use cost of goods sold or purchases.
Mixing periods
Quarterly payables with yearly cost of goods sold gives a figure four times too low.
Chasing a higher DPO at any price
Stretching suppliers can raise their prices or lower service. Weigh the gain against the supplier funding cost shown in the working capital calculator.
What to do with the result
Test what a term change is worth with the working capital calculator, then see the full effect in the cash conversion cycle calculator. Record the new terms in your contract and track them with the procurement KPI dashboard.
Questions about the DPO calculator
What is a good DPO?
It depends on the industry and your agreed terms. A DPO close to your standard payment terms means you pay on time. A far higher one suggests late payment.
Is a higher DPO always better?
Not always. It improves cash, but paying late can damage supplier relationships and remove early payment discounts.
How is DPO different from DSO?
DPO is how long you take to pay suppliers. DSO is how long customers take to pay you.
Which cost figure should I use?
Cost of goods sold is the usual choice. If you resell goods or want a purchase-based view, use total purchases on credit.