how to improve dpo
most often companies want a high dpo as long as this doesn t indicate it s inability to make payment a company can negotiate with its suppliers to extend payment terms if a company really prioritizes maximizing its dpo it can decline to take advantage of early payment discounts by using electronic payment systems a company can streamline its payment processes and make payments more quickly and efficiently this means that instead of issuing slower means of payment such as a check that may have to be processed and mailed early in order for it to be received in time instead a company can issue electronic payments the instant something is due if a company wants to decrease its dpo a company can also regularly monitor its accounts payable to identify and resolve any issues that may be delaying payment to suppliers a company can also more quickly resolve supplier payment problems if it has accurate and up to date records dpo may be most valuable when compared over time for example a company can see whether its dpo is improving or worsening over time and make the appropriate course of action accordingly advantages and disadvantages of dpoa company can use dpo to understand its financial flexibility by evaluating its dpo it can project its creditworthiness liquidity and financial health when a company s dpo is high this may either mean the company is struggling to pay bills on time or is effectively using credit terms only by measuring dpo can a company further evaluate 