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 Conditions for Calculating DPO

 

Depending on the analysis time frame you select, the system determines which accounting document line items are taken into account for calculating the different key performance indicators (KPIs), such as DPO, payables, and expenses.

The following conditions apply for the direct method for calculating DPO:

  • DPO is calculated for those line items that are cleared within the selected time frame (cleared payables), no matter when they have been posted.

  • Overdue DPO is calculated for those line items that are cleared within the selected time frame and the clearing date is later than the net due date.

The following conditions for calculating other KPIs apply for both direct and indirect method:

  • Expenses is calculated when a line item has been posted within the selected time frame, no matter when it is cleared.

  • Payables are the sum of those line items that have been posted before the end of the selected time frame and are open at the end of the time frame. That is, they are not yet cleared or they are cleared after the end of the time frame.

  • Overdue payables are those payables that are already overdue or become overdue in the selected time frame.

For those analysis steps that depict a development of the KPIs over time, the KPIs are calculated separately for each month based on the conditions mentioned earlier. That is, the KPIs do not relate to the entire selected time frame, but to each individual month.

In addition, the following conditions apply:

  • For open payables, “open” relates to the day when the analysis is performed. It does not relate to the end of the analysis time frame. Therefore, open payables are those payables that already existed in the selected time frame and are still open today.

  • As explained earlier, for overdue payables, “overdue” relates to the end of the analysis time frame. However, the analysis step List of Open Items contains a flag that indicates whether a specific line item is overdue. In this case, “overdue” relates to the day when the analysis is performed, and not to the end of the analysis time frame. Therefore, the flag indicates that a line item is overdue today, even if it was not overdue in the analysis time frame.

The conditions described in the preceding paragraphs are depicted in the following figures:

Note Note

For clearer illustration, figure ‘Time Selection Direct DPO’ is simplified. Here the posting date corresponds to the document date and base line date.

End of the note.