What is Days Payable Outstanding (DPO)?
Days payable outstanding measures the average number of days a company takes to pay its suppliers. It is calculated as (accounts payable / cost of goods sold) × number of days in the period.
How It Works
- Take the period’s accounts payable balance.
- Divide by COGS and multiply by days in the period.
- A higher DPO means longer payment terms — more working capital, but at the cost of supplier goodwill.
Saudi Context
Saudi B2B norms range from 30 to 90 days. With ZATCA Phase 2 e-invoicing, payables data feeds straight into supplier compliance and tax filings.
Example
A Saudi distributor with SAR 6 million payables and SAR 36 million annual COGS has a DPO of about 61 days.