What is Days Sales Outstanding (DSO)?
How long, on average, your cash is stuck in accounts receivable after you invoice.
Days Sales Outstanding (DSO): definition
DSO turns your receivables into a time figure: the lower it is, the faster you convert sales into cash. Rising DSO ties up working capital, strains cash flow, and can signal collection problems or over-generous terms. It is a core lever in the cash conversion cycle.
Days sales outstanding
DSO = (Accounts Receivable ÷ Credit Sales) × Number of Days
Use the same period for AR and sales (e.g., a month or a year). Lower DSO means faster collection.
How Fintra handles it
Fintra tracks DSO in real time from live AR and helps compress it: automated invoicing, reminders, and AI-flagged overdue accounts shorten the collection cycle, while the metric itself feeds cash-flow forecasts. You see DSO by customer, so you know exactly which accounts are dragging the average.
Worked example
Frequently asked questions
What is a good DSO?
It depends on your payment terms - a business on net-30 terms ideally runs a DSO near 30–40 days. Well above your terms suggests collection issues. The trend matters as much as the number: rising DSO is an early cash-flow warning.
How do you reduce DSO?
Invoice promptly and accurately, tighten credit terms, automate reminders, offer early-payment incentives, and follow up on overdue accounts quickly. Fintra automates invoicing and reminders and flags overdue accounts so collection does not depend on someone remembering.
What is the difference between DSO and DPO?
DSO measures how fast you collect from customers; DPO measures how long you take to pay suppliers. Together with inventory days they form the cash conversion cycle. Ideally you collect quickly (low DSO) while paying on reasonable terms (higher DPO).
Does Fintra calculate DSO automatically?
Yes. Fintra computes DSO from live accounts receivable and sales, shows it by customer, and feeds it into cash-flow forecasts - so you can see the working-capital impact of slow payers immediately.
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