"Days Payable Outstanding is an important metric that measures the health of accounts payable. The metric indicates how many days of expenses are hung up in accounts payable at any given time. A low number of days indicates that the company is paying their bills quickly. A growing number of days indicates that the company is taking advantage of favorable vendor terms, which helps with cash flow management. As long as bills are not overdue, it is a sound strategy to have longer payment terms with vendors."

Days payable outstanding (DPO) computes the average number of days a company needs to pay its bills and obligations.
Companies that have a high DPO can delay making payments and use the available cash for short-term investments as well as to increase their working capital and free cash flow. However, higher values of DPO, though desirable, may not always be a positive for the business as it may signal a cash shortfall and inability to pay.