How To Calculate DPO in Sage | Arithmix

DPO, or Days Payable Outstanding, is a financial metric that measures the average number of days it takes a company to pay its suppliers. It is an important indicator of a company's financial health and efficiency, as it reflects how well a company is managing its cash flow and its relationships with suppliers.

What Is DPO?

DPO is calculated by dividing the total accounts payable by the cost of goods sold per day. This gives you the average number of days it takes a company to pay its suppliers. For example, if a company has $100,000 in accounts payable and its cost of goods sold per day is $10,000, its DPO would be 10 days.

DPO is an important metric for both suppliers and buyers. For suppliers, it can help them understand how long they can expect to wait for payment from a particular buyer. For buyers, it can help them identify areas where they can improve their cash flow and negotiate better payment terms with suppliers.

When Is It Valuable To Calculate DPO?

Calculating DPO is valuable for any company that wants to improve its financial health and efficiency. It can help companies identify areas where they can improve their cash flow and negotiate better payment terms with suppliers.

For example, if a company has a high DPO, it may indicate that it is taking too long to pay its suppliers, which could lead to strained relationships and difficulty in securing future credit. On the other hand, if a company has a low DPO, it may indicate that it is paying its suppliers too quickly and missing out on opportunities to invest in growth.

By calculating DPO regularly, companies can monitor their payment performance and identify areas for improvement. They can also use DPO as a benchmark to compare their performance against industry averages and competitors.

In conclusion, calculating DPO is a valuable tool for any company that wants to improve its financial health and efficiency. By understanding what DPO is and when it is valuable to calculate, companies can use this metric to identify areas for improvement and negotiate better payment terms with suppliers.

How Do You Calculate DPO in Sage

Sage 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 Sage 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 Sage, 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 Sage 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 Sage 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.