Creditor days (DPO)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

Creditor days, or days payable outstanding, measure how long a business takes to pay its suppliers: trade payables divided by cost of sales, multiplied by 365. They are the one part of the cash conversion cycle that funds the business rather than consuming it, which makes a lengthening trend ambiguous — better terms negotiated from strength, or suppliers paid late because the cash is not there. A desk tells which by asking whether the terms changed by agreement, and reads creditor days stretched to fund growth as borrowing from people who can stop shipping.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.