Days Payable Outstanding in Australia 2025: Trends, Insights, and Business Impact

Cash flow is the lifeblood of every Australian business, and in 2025, the pressure to manage it smarter is more intense than ever. Enter Days Payable Outstanding (DPO)—a financial metric that’s gaining fresh attention as policy updates, supply chain disruptions, and digital payment innovations reshape how companies manage their supplier relationships. But what does DPO really reveal about your business, and how can you leverage it in today’s fast-moving economy?

What is Days Payable Outstanding—and Why Is It Under the Microscope?

DPO measures the average number of days a company takes to pay its suppliers after receiving an invoice. It’s a crucial indicator of how a business manages its working capital. In practical terms, a higher DPO means your business is holding onto cash longer, while a lower DPO suggests suppliers are being paid more quickly.

• Formula: DPO = (Accounts Payable / Cost of Goods Sold) x Number of Days

• Interpretation: A DPO of 45 means you pay suppliers every 45 days, on average.

In 2025, the Australian government is spotlighting DPO as part of its ongoing efforts to strengthen small business resilience. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has pushed for tighter payment term standards, with large corporates now facing increased scrutiny over late payments. The Payment Times Reporting Act (2020) continues to evolve, and as of January 2025, companies with annual turnover above $100 million must report quarterly on their supplier payment practices, putting DPO front and centre.

2025 Trends: How Are Australian Businesses Navigating DPO?

Recent data shows the median DPO for ASX 200 companies hovered around 44 days in 2024, but industry averages vary widely. Retailers, for instance, often negotiate longer payment cycles due to their purchasing power, while construction firms may see shorter DPOs due to tighter supply chain dependencies. Here’s how leading businesses are responding in 2025:

• Leveraging Automation: Automated accounts payable platforms are streamlining invoice processing, reducing errors and giving finance teams real-time visibility over payables. Xero and MYOB have rolled out AI-driven dashboards that help SMEs benchmark their DPO against industry peers.

• Supplier Relationship Management: With late payment penalties on the rise, businesses are collaborating more closely with suppliers to negotiate flexible payment terms that work for both parties—sometimes trading longer DPOs for early payment discounts.

• Regulatory Compliance: The Payment Times Reporting Regulator has begun issuing public ‘naming and shaming’ notices for persistent late payers, incentivising corporates to keep DPO within acceptable industry norms.

Real-world example: Woolworths Group has maintained a DPO near the retail sector median (around 41 days), but in 2025, the company introduced new supplier portal features to speed up invoice approvals, aiming to improve relationships with local producers and SMEs.

Optimising DPO: Striking the Right Balance

There’s no universal ‘ideal’ DPO—context is everything. Extending DPO can free up cash for investment or debt reduction, but push it too far and you risk alienating suppliers or running afoul of new transparency rules. Here’s what businesses are weighing in 2025:

• Cash Flow Strategy: CFOs are using DPO analytics to model the impact of payment timing on liquidity, especially as borrowing costs remain elevated in the wake of RBA’s cautious rate policy.

• Supplier Health: With ongoing supply chain shocks (from geopolitical tensions to climate events), companies are prioritising timely payments to critical suppliers to ensure continuity and avoid reputational damage.

• Transparency and ESG: Investors and customers increasingly scrutinise DPO as part of broader ESG (Environmental, Social, Governance) assessments, rewarding firms that treat suppliers ethically.

Pro tip: Regularly benchmark your DPO against industry peers and adjust payment practices as regulations and economic conditions evolve. In 2025, real-time data and digital tools make this easier—and more essential—than ever before.

Conclusion

Days Payable Outstanding isn’t just an accounting formula—it’s a window into your business’s financial discipline and supply chain relationships. With 2025’s regulatory shifts and economic headwinds, keeping a close eye on DPO is both a compliance necessity and a strategic advantage. Whether you’re a CFO at a listed company or an SME owner, understanding and optimising your DPO could mean the difference between thriving and merely surviving in today’s competitive landscape.