Days Payable Outstanding (DPO) by Industry: 2025 Benchmarks

What is Days Payable Outstanding (DPO)?

Days Payable Outstanding (DPO) measures how long a company takes to pay its suppliers after receiving goods or services. It is calculated as (Average Accounts Payable ÷ COGS) × 365. A DPO of 45 means the company holds cash for an average of 45 days after receiving a supplier invoice before paying it. DPO is the payables leg of the cash conversion cycle (CCC = DIO + DSO − DPO) and is the one component where higher is generally better — a longer DPO means the company is effectively using supplier credit to fund operations, reducing its own working-capital needs.

What is a good DPO?

Unlike DSO or DIO where lower is almost always better, a good DPO depends on context. A higher DPO reduces working-capital needs and is generally favorable for the buyer — as long as it stays within agreed payment terms. Paying too slowly strains supplier relationships, risks supply disruptions, and can trigger late-payment penalties or lose early-payment discounts. For most industries, a DPO in the 30-50 day range is considered healthy: short enough to maintain supplier goodwill, long enough to preserve cash. The benchmarks in this table show what each industry actually achieves — a DPO well below the industry median may signal unused negotiating leverage, while a DPO significantly above peers may signal financial stress or aggressive stretching of terms.

Which industries have the highest DPO?

Automotive has one of the highest median DPOs (~50 days) because OEM buyers dominate their Tier-1 and Tier-2 supplier base and can dictate payment terms. Pharmaceuticals and technology hardware both run around 48 days, driven by concentrated procurement of APIs, components, and contract manufacturing capacity. Consumer electronics (~45 days) and apparel (~45 days) also achieve extended terms due to concentrated relationships with large contract manufacturers. By contrast, grocery and supermarkets (~17 days) and restaurants (~18 days) have some of the lowest DPOs because perishable-supply logistics require fast payment to maintain fresh-product delivery.

How does DPO affect cash flow?

DPO directly affects operating cash flow by determining how much of COGS a company has already paid versus still owes. A rising DPO means accounts payable is growing relative to COGS — the company is paying its suppliers more slowly, which adds cash inflows in the operating section of the cash flow statement. This is one reason a high DPO can inflate reported operating cash flow without representing real earnings quality improvement. Conversely, a falling DPO means the company is paying suppliers faster, which consumes cash. Analysts often adjust free cash flow for DPO trends when comparing companies within an industry — a company with a 60-day DPO and a competitor with 30-day DPO look much more similar on net income than on cash flow.