when a company knows its dpo it can better assess whether it is paying its bills quickly which helps maintain good relationships with suppliers a company usually wants to balance the benefit of paying a vendor early against the purchasing power lost by spending capital early in many cases a company may want to be on the good graces of a supplier to potentially receive goods earlier 
while dpo is useful in comparing relative strength among companies there is no clear cut figure for what constitutes a healthy days payable outstanding as the dpo varies significantly by industry competitive positioning of the company and its bargaining power large companies with a strong power of negotiation are able to contract for better terms with suppliers and creditors effectively producing lower dpo figures than they would have otherwise in addition a higher dpo may mean several things and usually must be further investigated as the figure by itself doesn t mean much for example a company may be thinking that its dpo means it is efficiently using capital on the contrary the company may actually be paying vendors late and racking up late fees therefore dpo by itself doesn t amount to much unless management knows the drivers behind it can be used to gauge the financial health of a company