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Average Payment Period: Definition, Formula, and Example

However, the company has yet to pay the related invoice, so the cash remains under the possession of the company until issued. On the contrary, if the business is more focused on creditworthiness, it may raise more finance and incur interest charges. In another version, the average value of beginning AP and ending AP is taken, and the resulting figure represents the DPO value during that particular period. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. Days payable outstanding (DPO) is a...