How To Calculate DPO in TallyPrime | Arithmix

Calculating DPO in TallyPrime is a straightforward process that can provide valuable insights into your business's financial health. Before we dive into the steps, let's first understand what DPO is and when it's valuable to calculate it.

What Is DPO?

DPO stands for Days Payable Outstanding, which is a financial metric that measures the average number of days it takes for a business to pay its suppliers. It's calculated by dividing the total accounts payable by the cost of goods sold and multiplying the result by the number of days in the period being measured.

For example, if a business has $50,000 in accounts payable, $200,000 in cost of goods sold, and the period being measured is 90 days, the DPO would be calculated as follows:

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

This means that on average, it takes the business 22.5 days to pay its suppliers.

When Is It Valuable To Calculate DPO?

Calculating DPO can be valuable for several reasons. First, it can help you identify potential cash flow issues. If your DPO is increasing over time, it could indicate that you're taking longer to pay your suppliers, which could lead to strained relationships and even supply chain disruptions.

Second, DPO can be used to benchmark your business's performance against industry averages. If your DPO is significantly higher or lower than the average for your industry, it could indicate that you're either managing your cash flow well or that you have room for improvement.

Finally, DPO can be used to negotiate better payment terms with your suppliers. If you have a high DPO, you may be able to negotiate longer payment terms, which can help improve your cash flow.

Now that we've covered the basics of DPO, let's move on to how to calculate it in TallyPrime.

To calculate DPO in TallyPrime, you'll need to first generate a report that shows your accounts payable and cost of goods sold for the period being measured. Once you have this report, you can use the formula we discussed earlier to calculate your DPO.

It's important to note that DPO is just one of many financial metrics that can help you better understand your business's financial health. By regularly tracking and analyzing these metrics, you can make more informed decisions and take proactive steps to improve your cash flow and overall financial performance.

How Do You Calculate DPO in TallyPrime

TallyPrime 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 TallyPrime 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 TallyPrime, 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 TallyPrime 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 TallyPrime 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.