How To Calculate Days Payable Outstanding in FinancialForce | Arithmix

Calculating Days Payable Outstanding (DPO) is an important metric for any business. It helps you understand how long it takes for your company to pay its suppliers and vendors. This is a critical measure of your company's financial health, as it can impact your cash flow and relationships with suppliers.

What Is Days Payable Outstanding?

Days Payable Outstanding is a financial metric that measures the average number of days it takes for a company to pay its suppliers and vendors. It is calculated by dividing the total accounts payable by the average daily cost of goods sold. The result is the number of days it takes for a company to pay its suppliers.

For example, if a company has $100,000 in accounts payable and an average daily cost of goods sold of $10,000, the DPO would be 10 days. This means it takes the company an average of 10 days to pay its suppliers.

When Is It Valuable To Calculate Days Payable Outstanding?

Calculating DPO is valuable for any business, but it is especially important for those that rely heavily on suppliers and vendors. If your company has a high DPO, it may indicate that you are taking too long to pay your suppliers. This can strain relationships and lead to supply chain disruptions.

On the other hand, a low DPO may indicate that you are paying your suppliers too quickly, which can negatively impact your cash flow. By calculating DPO, you can determine the optimal payment terms for your suppliers and vendors, which can help you maintain healthy relationships and improve your financial health.

In addition, DPO can be used to compare your company's payment performance to industry benchmarks. This can help you identify areas for improvement and make informed decisions about your payment policies.

In conclusion, calculating Days Payable Outstanding is a critical metric for any business. By understanding how long it takes for your company to pay its suppliers and vendors, you can make informed decisions about your payment policies and improve your financial health.

How Do You Calculate Days Payable Outstanding in FinancialForce

FinancialForce itself isn’t naturally geared towards letting you calculate complex metrics like Days Payable Outstanding. As an alternative, teams typically use products like Arithmix to import data from FinancialForce and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like FinancialForce, combine it with data from other systems, and create calculations like Days Payable Outstanding.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Days Payable Outstanding in Arithmix

Calculating metrics like Days Payable Outstanding is simple in Arithmix. Once you've created your free account, you’ll be able to import your FinancialForce data, and use it to create natural language formulas for metrics like Days Payable Outstanding.

Arithmix is designed to give you the power to build any calculations you want on top of your FinancialForce data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.