How To Calculate Days Payable Outstanding in MS Dynamics | Arithmix

Calculating Days Payable Outstanding (DPO) is an important metric for businesses to understand their financial health. DPO is the average number of days it takes a company to pay its suppliers for goods and services received. It is calculated by dividing accounts payable by the average daily cost of goods sold.

Knowing your DPO can help you manage your cash flow and negotiate better payment terms with your suppliers. It can also give you insight into your company's efficiency in managing its accounts payable.

What Is Days Payable Outstanding?

Days Payable Outstanding (DPO) is a financial metric that measures the average number of days it takes a company to pay its suppliers for goods and services received. It is an important measure of a company's financial health and efficiency in managing its accounts payable.

DPO is calculated by dividing accounts payable by the average daily cost of goods sold. This calculation gives you an idea of how long it takes your company to pay its suppliers on average.

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

When Is It Valuable To Calculate Days Payable Outstanding?

Calculating DPO is valuable for businesses of all sizes, but it is especially important for those that rely heavily on their suppliers. If your company has a high DPO, it may indicate that you are taking too long to pay your suppliers, which could damage your relationships with them.

On the other hand, if your DPO is low, it could mean that you are paying your suppliers too quickly and may be hurting your cash flow. Knowing your DPO can help you negotiate better payment terms with your suppliers and improve your cash flow management.

Additionally, calculating DPO can help you identify areas where you can improve your accounts payable processes. For example, if you notice that your DPO has increased significantly, it may be a sign that your accounts payable team is struggling to keep up with payments.

In conclusion, calculating Days Payable Outstanding is an important metric for businesses to understand their financial health and efficiency in managing their accounts payable. It can help you manage your cash flow, negotiate better payment terms with your suppliers, and identify areas for improvement in your accounts payable processes.

How Do You Calculate Days Payable Outstanding in MS Dynamics

MS Dynamics 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 MS Dynamics 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 MS Dynamics, 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 MS Dynamics 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 MS Dynamics 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.