# DSO / DPO

> DSO and DPO are the average days a company takes to collect from customers and to pay suppliers. Together they explain much of the pressure on cash.

Updated: 2026-09-03 · Author: Santiago Viglione (Fibady) · https://www.fibady.com/en/glossary/dso-dpo

DSO and DPO are the average number of days a company takes to collect from its customers (Days Sales Outstanding) and to pay its suppliers (Days Payables Outstanding). The gap between them explains much of the business's cash requirement.

## How it is calculated

DSO = Receivables balance ÷ Sales in the period × days in the period. DPO = Payables balance ÷ Purchases in the period × days in the period. With annual figures the period is 365 days; with monthly, 30.

## Example with numbers

Annual sales 3,650,000 and receivables 600,000: DSO = 600,000 ÷ 3,650,000 × 365 = 60 days. Annual purchases 1,825,000 and payables 150,000: DPO = 30 days. The company funds a 30-day gap with its own cash; cutting DSO to 45 days would free up 150,000.

## How Fibady does it

Receivables and payables balances come from each entity's accounting and sales and purchases from the consolidated P&L, so DSO and DPO are calculated per entity and for the group without intermediate spreadsheets. The direct cash flow from banks shows whether actual collections keep pace with DSO.

## Frequently asked questions

### Is DSO the same as agreed payment terms?

No. The agreed term is what the contract says; DSO is what actually happens, including delays and disputed invoices.

### How often are they calculated?

Monthly with the close, with the trend over the last 12 months. A DSO that rises three months in a row warns earlier than the cash balance does.

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