Days Payable Outstanding

The Days Payable Outstanding widget shows the average number of days a company takes to pay its suppliers yearly.

The widget indicates how effectively a company manages its cash and accounts payable.

The widget displays a line chart, where the horizontal axis represents years and the vertical axis represents the average number of days to pay suppliers.

The Days Payable Outstanding widget query logic

Days Payable Outstanding (DPO) = (Average Accounts Payable ÷ Cost of Goods Sold) × 365 days

Note: 

As a prerequisite, you must configure an analysis dimension on account records to group their accounts into a structure for reporting. For more information, see SunSystems Administrator Guide.

The Days Payable Outstanding widget query calculates the average number of days a company takes to pay suppliers annually. It uses Accounts Payable (AP) and Cost of Goods Sold (COGS) as key inputs. For accuracy, the widget uses the average AP balance or the ending AP balance when the average is not available. COGS is taken from the income statement and represents the direct cost of goods or services sold.

A higher Days Payable Outstanding means a company takes longer to pay, improving cash flow by holding onto cash longer, though it can strain supplier relations. A lower Days Payable Outstanding indicates quicker payments, which strengthens supplier relationships but potentially reduces cash available for other uses.