Days payable outstanding (DPO) measures the average number of days a company takes to pay its suppliers after receiving an invoice. It shows how long a business holds onto cash before settling its accounts payable. A higher DPO means the company keeps cash longer, while a lower DPO means it pays suppliers faster.
How it works
The standard formula is:
DPO = (Average accounts payable / Cost of goods sold) x number of days in the period
For example, if a company has average payables of 60,000 dollars, COGS of 365,000 dollars, and you are measuring a 365-day year, DPO is (60,000 / 365,000) x 365, which equals 60 days. On average, this business pays its suppliers 60 days after being invoiced.
Why it matters
DPO is a working capital metric. Stretching it (paying later) frees up cash you can use for inventory, payroll, or growth. But push it too far and you strain supplier relationships or forfeit early-payment discounts. Finance teams watch DPO alongside days sales outstanding (DSO) and days inventory outstanding to understand the full cash conversion cycle.
How it applies to B2B quoting on Shopify
When you sell B2B, the payment terms you quote directly shape your buyer’s DPO, and your own DPO depends on the terms your suppliers give you. If you offer net 30 or net 60 on a quote, you are lengthening the buyer’s DPO and, in effect, financing their purchase. That trade-off belongs in the quote itself: state terms clearly, and reconcile them against your own payables so you are not funding both sides of the deal.
Because a B2B quote often becomes a real Shopify order, keeping terms explicit on the quote helps both parties forecast cash accurately once the buyer accepts and pays.