Compliance
Increased DPO to Average 60 Days Across Region
Increased Days Payable Outstanding (DPO) to a regional average of 60 days through supplier negotiation, payment term harmonization, and CFO alignment.
Industry
Manufacturing
Direct/Indirect
Indirect
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Sourcing Context & Procurement Challenge
The company's Days Payable Outstanding (DPO) varied significantly across countries and suppliers, leading to poor cash utilization. Treasury aimed to harmonize payment terms regionally to free up working capital, but supplier resistance and local practices made this difficult. Procurement’s challenge was to execute this shift without harming supply continuity.
Procurement Objectives & Strategic Levers
The goal was to increase average DPO to 60+ days, with consistent payment terms and minimized supply risk. Strategic levers included term harmonization during renewals, contract bundling, and collaboration with Treasury and Finance to set clear term targets and escalation protocols.
Sourcing Strategy & Execution Approach
Procurement analyzed all active supplier contracts and renewal dates to identify leverage points. During renegotiations, extended terms were embedded into contracts, supported by clear communication of group payment policies. Strategic suppliers were offered early-payment programs or volume commitments in exchange for term extensions.
Results & Values Delivered
DPO increased to 62 days on average, releasing significant cash flow benefits for the business. Suppliers accepted new terms with minimal friction due to professional engagement and alternative value offered. Procurement contributed directly to working capital KPIs for the first time.
Role & Contribution
We led the regional DPO program, working with Treasury and local Procurement teams to prioritize negotiation sequences. I oversaw all strategic supplier engagements and designed the governance structure to monitor DPO evolution monthly.
Conclusion & Reflections
Payment terms are not a financial trick – they’re a strategic tool. This case proved that procurement can unlock working capital without destroying relationships. The secret: negotiation is not confrontation – it’s structured value exchange.