Days payable outstanding

Days payable outstanding (DPO) approximates how long a business uses supplier credit. A common proxy is average trade payables divided by cost of goods sold, multiplied by days in the same period. The result is days; COGS approximates the purchasing flow.[1][2]

Use a consistent VAT basis and state if an alternative calculation instead uses credit purchases. Higher DPO may provide financing room or indicate overdue payments. Interpret it alongside invoice ageing and agreed terms rather than assuming that a longer period is always better.