DPO (Days Payable Outstanding)
Category: Finance
Also searched as: DPO
Definition (plain English)
DPO measures how many days, on average, a business takes to pay suppliers and other vendors after costs are incurred or invoiced.
Why it matters commercially
Longer payable timing can improve buyer cashflow, but pushing suppliers too far can raise prices, reduce allocation, or force stricter payment controls.
Example
A buyer negotiated later balance payment after inspection, but kept supplier trust by defining the payment trigger and paying bank fees on time.
Common mistake
Treating DPO improvement as free cash without checking supplier leverage, shipment risk, early-payment discounts, and whether delayed payment blocks production or document release.
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