How To Calculate DPO in NetSuite ERP | Arithmix

Calculating DPO (Days Payable Outstanding) is an important metric for any business looking to manage its cash flow effectively. It helps you understand how long it takes your business to pay off its debts to suppliers and vendors. This can be a valuable tool for managing your finances and ensuring that you are not overextending yourself financially.

What Is DPO?

DPO is a measure of the average number of days it takes for a business to pay its accounts payable. It is calculated by dividing the accounts payable by the cost of goods sold and multiplying the result by the number of days in the period being measured. This gives you an idea of how long it takes your business to pay off its debts to suppliers and vendors.

For example, if your accounts payable is $50,000 and your cost of goods sold is $200,000 for a 90-day period, your DPO would be:

DPO = ($50,000 / $200,000) x 90 = 22.5 days

This means that it takes your business an average of 22.5 days to pay off its accounts payable.

When Is It Valuable To Calculate DPO?

Calculating DPO can be valuable for businesses in a number of different situations. For example, if you are trying to manage your cash flow more effectively, understanding your DPO can help you identify areas where you can improve your payment processes and reduce the amount of time it takes to pay off your debts.

Additionally, if you are looking to negotiate better payment terms with your suppliers and vendors, understanding your DPO can help you make a more informed case for why you need longer payment terms. By showing that your DPO is already relatively short, you can demonstrate that you are a reliable payer and that extending your payment terms would not be a significant risk for your suppliers and vendors.

Overall, calculating DPO is a valuable tool for any business looking to manage its cash flow effectively and build strong relationships with its suppliers and vendors. By understanding your DPO and taking steps to improve it where necessary, you can ensure that your business is financially stable and well-positioned for long-term success.

How Do You Calculate DPO in NetSuite ERP

NetSuite ERP itself isn't naturally geared towards letting you calculate complex metrics like DPO. As an alternative, teams typically use products like Arithmix to import data from NetSuite ERP 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 NetSuite ERP, combine it with data from other systems, and create calculations like DPO.

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 DPO in Arithmix

Calculating metrics like DPO is simple in Arithmix. Once you've created your free account, you'll be able to import your NetSuite ERP data, and use it to create natural language formulas for metrics like DPO.

Arithmix is designed to give you the power to build any calculations you want on top of your NetSuite ERP 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.