Days Payable Outstanding Calculation

The Days Payable Outstanding (DPO) metric evaluates how many days, on average, your company takes to pay your creditors. A higher DPO can mean your company delays payments to use funds for short-term investments and boost cash flow. Or, it can show that resource funds might not be used efficiently.

NetSuite calculates the monthly Days Payable Outstanding using the following formula:

Similar to the Days Sales Outstanding calculation, if Company B has two vendor bills settled for the month of May:

Vendor Bills

Transaction Date

Date Closed

Number of Days Open

Vendor Bill A

May 5, 2024

May 31, 2024

26

Vendor Bill B

May 15, 2024

May 31, 2024

16

The DPO is calculated for May 2024 as:

Related Topics

General Notices