How To Calculate DPO in Wave Accounting | Arithmix

If you're a business owner or accountant, you know that managing your cash flow is crucial to the success of your business. One important aspect of cash flow management is calculating your Days Payable Outstanding (DPO). In this article, we'll explain what DPO is, when it's valuable to calculate it, and how to do so in Wave Accounting.

What Is DPO?

DPO is a financial metric that measures the average number of days it takes for a business to pay its suppliers or vendors. In other words, it tells you how long it takes for your business to pay its bills. A high DPO means that your business is taking a long time to pay its bills, while a low DPO means that your business is paying its bills quickly.

DPO is calculated by dividing the total accounts payable by the cost of goods sold per day. The result is the average number of days it takes for your business to pay its bills.

When Is It Valuable To Calculate DPO?

Calculating DPO is valuable for a number of reasons. First, it can help you identify cash flow issues. If your DPO is high, it means that you're taking a long time to pay your bills, which could be a sign that you're having cash flow problems. On the other hand, if your DPO is low, it means that you're paying your bills quickly, which could be a sign that you have excess cash on hand.

Second, calculating DPO can help you negotiate better payment terms with your suppliers or vendors. If you have a high DPO, you may be able to negotiate longer payment terms, which can help improve your cash flow. Conversely, if you have a low DPO, you may be able to negotiate shorter payment terms, which can help you save money on interest and other fees.

How To Calculate DPO in Wave Accounting

Calculating DPO in Wave Accounting is easy. Here's how:

1. Log in to your Wave Accounting account.
2. Click on the "Accounting" tab.
3. Click on "Reports" in the left-hand menu.
4. Select "Accounts Payable Aging" from the list of reports.
5. Set the date range for the report.
6. Divide the total accounts payable by the cost of goods sold per day to calculate your DPO.

Once you've calculated your DPO, you can use it to make informed decisions about your cash flow management and supplier/vendor relationships.

In conclusion, calculating your DPO is an important part of cash flow management. By understanding what DPO is, when it's valuable to calculate it, and how to do so in Wave Accounting, you can take control of your cash flow and make informed decisions about your business.

How Do You Calculate DPO in Wave Accounting

Wave Accounting 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 Wave Accounting 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 Wave Accounting, 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 Wave Accounting 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 Wave Accounting 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.