Days Sales Outstanding (DSO)

tl;drDays Sales Outstanding (DSO) measures the average number of days it takes a company to collect payment after a sale is made.

It's calculated as accounts receivable divided by total credit sales, multiplied by the number of days in the period. A lower DSO means customers are paying faster, so cash is available sooner rather than sitting on the books as a receivable.

DSO is one of the clearest signals of how well a company's collections process is actually working. A rising DSO can mean customers are stretching payment terms, an invoicing process is introducing delays, or collections follow-up isn't happening consistently. Because it compounds across every invoice and every customer, a small process fix, chasing overdue invoices a few days earlier, or resolving disputes faster, can move the number meaningfully.

Companies operating across entities and currencies often calculate DSO per entity as well as at the group level, since collection norms and payment terms vary widely by market.

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