Days Payable Outstanding (DPO)
The average number of days a company takes to pay its suppliers after receiving goods or services.
What is DPO?
Days Payable Outstanding (DPO) measures how long on average a company takes to pay its trade creditors. It is calculated as: DPO = (Accounts Payable / Cost of Goods Sold) × Number of Days. A higher DPO means the company is taking longer to pay suppliers — effectively using supplier credit as free short-term financing. Extending payment terms conserves cash and improves working capital, but pushing DPO too high damages supplier relationships and may result in lost discounts or supply disruptions. Large retailers and tech companies typically negotiate very long payment terms — Walmart's DPO historically exceeds 40 days. DPO is analyzed alongside DSO and DIO as part of the cash conversion cycle (CCC = DIO + DSO − DPO).
Example
Apple's DPO has historically been among the highest in manufacturing — often 90–100 days — reflecting Apple's enormous purchasing power and its ability to dictate payment terms to suppliers. Because Apple pays late, it holds its suppliers' cash for months, effectively receiving billions in interest-free supplier financing. This is a significant competitive advantage that smaller manufacturers who must pay in 30 days cannot replicate.