WELCOME TO ISSUE NO #050

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📆 Today’s Rundown

Hey 👋, hope you had a great week! I bet you missed me, but I was so busy coooking something that you’re going to love. Stay tuned for more info! 👀

In the last issue, we discussed why tracking Cash Inflows and Outflows matters, and now we are moving with the next topic from Cash Flow & Expenses content.

Let’s talk about ⬇️

Days Payable Outstanding (DPO)

Why does it matter?
Because DPO gives you the power to control how long you hold onto your cash—and in SaaS, every extra day of liquidity counts.

Here’s the thing:
👉 High DPO = more cash to invest
👉 Low DPO = faster outflows and tighter cash squeezes

But most founders either don't measure it properly or don't optimize it strategically.

So today, I'm breaking down exactly how DPO works—and how you can use it to make smarter financial moves:

TL;DR

1️⃣ What exactly is DPO (and why it matters)?

2️⃣ How to calculate DPO (the SaaS-optimized way)

3️⃣ How DPO links to SaaS cash flow health

4️⃣ How to strategically optimize your DPO

5️⃣ Why DPO matters more than ever in today's SaaS market

1️⃣ What exactly is DPO (and why it matters)?

DPO measures how efficiently your company manages short-term cash outflows.

The bigger your DPO (without damaging vendor relationships), the more cash you retain in the business to cover growth initiatives, payroll, or unexpected costs.

In SaaS, especially post-Series A, this flexibility isn't nice to have — it's survival fuel.

But, there's a fine line:
Too low DPO → you’re draining cash too fast.
Too high DPO → you risk upsetting critical vendors.

The goal is strategic balance, not mindless delay.

2️⃣ How to calculate DPO (the SaaS-optimized way)

If you're in SaaS, here’s the better approach:

Step 1:
Get your AP Turnover:
➡️ Total Vendor Purchases on Credit ÷ [(Beginning AP + Ending AP) ÷ 2]

Step 2:
Then, calculate your DPO:
➡️ 365 ÷ AP Turnover

Real-world example:

• Vendor purchases: $750K

• Beginning AP: $100K

• Ending AP: $200K

AP Turnover = $750K ÷ [$100K + $200K ÷ 2] = 5
DPO = 365 ÷ 5 = 73 days

Meaning you hold cash for 73 days on average before paying bills. That’s a strong liquidity position!

Need clarity on your financial strategy or cash flow optimization?

I'm Aleksandar, fractional CFO at Fiscallion, where we help founders like you achieve financial clarity, streamline reporting, and build investor-ready forecasts.

Ready to level up your finances?

3️⃣ How DPO links to SaaS cash flow health

In the SaaS world, cash is your oxygen.

And DPO directly impacts how much oxygen you have:

• A higher DPO gives you more working capital without raising external money.

• A lower DPO may mean stronger vendor relationships but less cash buffer.

When paired with other metrics like:

• DSO (Days Sales Outstanding) — how fast you collect from customers

• OCF (Operating Cash Flow) — cash generated from operations

• Net Burn — your monthly cash consumption

• FCF (Free Cash Flow) — cash leftover after operations and investments

...DPO helps you see the full financial picture.

The interplay between these metrics tells you: Are we managing cash flow wisely or bleeding slowly?

4️⃣ How to strategically optimize your DPO

If you're wondering how to actually improve DPO without upsetting suppliers, here’s what works:

✅ Negotiate longer payment terms upfront (net 45–60 days instead of 30)
✅ Use your AP aging reports to monitor upcoming due dates and prevent missed opportunities
✅ Prioritize payments strategically (take advantage of early-pay discounts only when it saves you more than cash retention)
✅ Review vendor contracts regularly to re-negotiate based on spend volume or loyalty
✅ Build strong supplier relationships — trust can buy you flexibility

Remember:
It’s not just about pushing out payments—it’s about intentional cash flow design.

5️⃣ Why DPO matters more than ever in today's SaaS market

In a world where "growth at all costs" has shifted to "capital efficiency first," founders who understand metrics like DPO have a massive edge.

VCs today ask:

• "How long is your runway if ARR slows down?"

• "Are you managing cash intentionally, or just burning?"

Mastering DPO helps you answer those questions with confidence.

Because at the end of the day:

It’s not just how much you grow. It’s how smartly you manage the fuel for that growth.

Hope this gives you clarity on why DPO isn't just another accounting number — it's a strategic lever you can start pulling today.

If you have any SaaS finance questions—or want me to dive deeper into things like cash conversion cycles or AP best practices—just hit reply.

Would love to hear from you 🙂 

Chat soon

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