How To Calculate Days Payable Outstanding in Sageworks | Arithmix
Learn how to calculate Days Payable Outstanding (DPO) in Sageworks with our step-by-step guide. Improve your financial analysis skills and gain insights into your company's cash flow management.
Calculating Days Payable Outstanding (DPO) is an important financial metric that helps businesses understand how long it takes them to pay their suppliers. This metric is calculated by dividing the total accounts payable by the average daily cost of goods sold. While there are many ways to calculate DPO, using a software like Sageworks can make the process much easier and more accurate.
What Is Days Payable Outstanding?
Days Payable Outstanding is a financial metric that measures the average number of days it takes a business to pay its suppliers. This metric is important because it helps businesses understand their cash flow and liquidity. A high DPO can indicate that a business is taking too long to pay its suppliers, which can strain relationships and even lead to supply chain disruptions. On the other hand, a low DPO can indicate that a business is paying its suppliers too quickly, which can hurt cash flow and profitability.
Calculating DPO is relatively straightforward. You simply divide the total accounts payable by the average daily cost of goods sold. The resulting number represents the average number of days it takes a business to pay its suppliers.
When Is It Valuable To Calculate Days Payable Outstanding?
Calculating DPO is valuable for businesses of all sizes and industries. It can help businesses understand their cash flow and liquidity, as well as identify areas for improvement in their supply chain management. For example, if a business has a high DPO, it may be able to negotiate better payment terms with its suppliers. On the other hand, if a business has a low DPO, it may need to reevaluate its payment policies to improve cash flow.
In addition, calculating DPO can be useful for investors and lenders who are evaluating a business's financial health. A high DPO can indicate that a business is managing its cash flow well, while a low DPO may raise concerns about the business's ability to pay its debts.
In conclusion, calculating Days Payable Outstanding is an important financial metric that can help businesses understand their cash flow and liquidity. While there are many ways to calculate DPO, using a software like Sageworks can make the process much easier and more accurate. By regularly monitoring DPO, businesses can identify areas for improvement in their supply chain management and make informed decisions about their payment policies.
How Do You Calculate Days Payable Outstanding in Sageworks
Sageworks 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 Sageworks 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 Sageworks, 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 Sageworks 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 Sageworks 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.Use Arithmix free