Forecasting With Days Payable Outstanding
Use the Days Payable Outstanding form to estimate the expected closing Accounts Payable balances for open periods. To calculate the projected closing Accounts Payable balances, enter the expected percentage purchases on credit for the open periods. Additionally, use the historical Days Payable Outstanding (DPO) as reference to enter the expected number of days for purchases outstanding.
The form values update based on the following calculations:
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Purchase on Credit =Total Cost of Goods Sold ×% Purchases on Credit.
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Trade Creditor Purchases per Day =Purchases on Credit ÷Days in Month.
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Accounts Payable – Trade Closing Balance = Days Payable Outstanding × Trade Creditor Purchases per Day
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Accounts Payable – Trade Monthly Movements = Previous Period Closing Balance – (Days Payable Outstanding × Trade Creditor Purchases Per Day)
Or
Accounts Payable – Trade Monthly Movements = Previous Period Closing Balance – Forecast Period Closing Balance.
If you have not already done so, ensure the Days in Month form is filled before you begin following the steps.
To calculate the expected Accounts Payable closing balances for open periods:
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From the Home page, go to Financials > Balance Sheet Trending.
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Click Days Payable Outstanding.
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In the Point of View, select a Version, Subsidiary, and Currency.
If you use Forms 1.0, click the Go icon
to apply the changes to the POV. -
Review the Total Cost of Goods Sold projection for the Forecast periods.
Note:The Total Cost of Goods Sold is derived from the Income Statement.
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In the % of Purchase on Credit row, click a cell (data area) and enter the percentage of purchases expected to be on credit. This is based on historical Actuals and your company's purchasing practices. For example, enter 0.01 for a 1% increase or -0.01 for a 1% decrease.
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In the Days Payable Outstanding row, click a cell (data area) and enter the number of days that payables are expected to be outstanding. This is based on past payment history.
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Click Save.
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(Optional) To populate the Balance Sheet with the adjusted data, right-click the data grid and select Aggregate to Balance Sheet. The form populates with data in the input currency.
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(Optional) To have your changes reflected in the relevant financial statements in the input and reporting currencies:
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Go to the Home page and click the Rules card.
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Beside the ruleset NFS_All Accts Forecast Data Refresh, click the Launch arrow.
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