DSO vs DPO
DSO is days sales outstanding: how long customers take to pay. DPO is days payable outstanding: how long the firm takes to pay suppliers. 45 against 30, with DIO 60, is a 75 day CCC. 30 against 100, with DIO 20, is a CCC of minus 50.
| Days sales outstanding | Days payable outstanding | |
|---|---|---|
| What it clocks | Receivables against daily sales. | Payables against daily cost of goods. |
| First sheet | DSO 45. Plus DIO 60 is a 105 day operating cycle. | DPO 30. CCC 75 days. The firm funds 75 days of the 105. |
| Negative CCC | DSO 30. Operating cycle 50 with DIO 20. | DPO 100. CCC minus 50 days. Suppliers more than fund the loop. |
| Equal clocks | DSO 40. Operating cycle 80 with DIO 40. | DPO 40. CCC 40 days. Matching DSO to DPO does not zero the cycle. |
| Pushing it | Cutting DSO by refusing customers can cost more than the cash it frees. | Stretching DPO can raise supplier prices or cut service. The formula still prints a prettier CCC. |
| When you would pick it | The customer clock inside the operating cycle. | The supplier clock that funds part of that cycle. |
On this page
One clock collects, one clock pays
DSO sits in the operating cycle. DPO is subtracted after. DSO against DIO is the two clocks inside the 105. This page is customers against suppliers. How the cash conversion cycle works is the residual. The cash conversion cycle calculator takes both as inputs.
They are not the same denominator on the ledger
DSO is usually receivables over daily sales. DPO is usually payables over daily cost of goods. Mixing sales into DPO, or cost into DSO, is how two firms print days that cannot be compared. This is educational material, not financial advice.
Worked examples
45 against 30
DSO 45, DIO 60, DPO 30. What is CCC?
- Operating cycle 105 days.
- CCC 75 days. DSO 45, DPO 30.
DSO is 45. DPO is 30. Operating cycle 105 days. CCC 75 days.
30 against 100
DSO 30, DIO 20, DPO 100. What is CCC?
- Operating cycle 50 days.
- CCC minus 50 days. DSO 30, DPO 100.
DSO is 30. DPO is 100. Operating cycle 50 days. CCC minus 50 days.
40 against 40
DSO 40, DIO 40, DPO 40. What is CCC?
- Operating cycle 80 days.
- CCC 40 days. DSO 40, DPO 40.
DSO is 40. DPO is 40. Operating cycle 80 days. CCC 40 days.
Common questions
Should DSO equal DPO?
No target says so. Equal clocks of 40 still leave a 40 day CCC, because DIO is still sitting in the loop.
Why can CCC go negative when DSO is positive?
Because DPO can exceed DSO plus DIO. On the second sheet that is 100 against 50.
Are 45 and 30 targets?
They are the teaching sheet. This is educational material, not financial advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.