Quick answer
Days sales outstanding (DSO) measures the average number of days it takes to collect payment after a sale: (accounts receivable ÷ credit sales) × days in period. A lower DSO means faster cash.
The DSO formula
DSO = (Accounts receivable ÷ total credit sales) × number of days. Example: $300,000 AR ÷ $600,000 monthly-equivalent sales over 30 days = 15 days.
Benchmarks
Most B2B companies run 30–60 days; anything above 60 is usually a cash-flow risk.
How to lower DSO
Clear terms, prompt invoicing, credit checks on new customers, automated reminders — or factoring, which effectively brings DSO to one or two days.
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Written and reviewed by the National Invoice Factoring funding team — specialists in receivables and trade finance since 2009.
