Across my last two posts, I've been following the O2C story, where orders get stuck, and where cash gets stuck even after the invoice is correct and on time. That's one side of working capital. This time, we cross over to the other side, Procure-to-Pay, and the cash going out rather than coming in.
Here's what makes Accounts Payable a harder problem than it looks. AR has one direction to fix, get paid faster. AP has two, and moving the wrong way on either one costs the business money. Pay a day early on thousands of invoices and you've handed working capital back to suppliers for nothing. Pay a day late on the wrong ones and you've lost a discount, triggered a penalty, or put a supplier relationship on notice. Both look identical on a DPO trend line, which is exactly the problem.
An identical DPO number can be hiding completely different realities underneath it, manual invoice entry creating delays that have nothing to do with strategy, invoices stuck on a failed three-way match while a discount window quietly closes, payment terms on the invoice that don't match what was actually negotiated, or an approval sitting in someone's queue long enough that payment stopped being a deliberate decision at all.
This isn't a discipline problem. According to Hackett Group's 2025 Working Capital Survey, the gap between top-quartile and median performers in DPO runs to a 9-point performance delta, and it's widening even as overall payables performance improves. Top performers aren't paying later by accident, they're managing timing as a deliberate lever. Median performers are mostly just waiting to see what the process does.
That's not a cash discipline problem. It's a visibility one.
People of the ARIS Community, I want to hear your thoughts:
- Do you know how consistently payment terms are applied across your supplier base, or is DPO more of an average you report than a number you actively manage?
- How often do you think early payment discounts go uncaptured simply because an invoice sat in someone's queue, or failed a match, a few days too long?
It would be great to have your feedback, either in the comments below or if you wanted to set up a call to talk through.
Lee