How-to Playbook
How to reduce your DSO
What high DSO costs you
DSO measures how long, on average, it takes to collect a sale. Every extra day of DSO is a day your own cash funds your customers. For a business billing $500K a month, cutting DSO from 52 to 40 days frees roughly $200K of working capital: money you can deploy instead of borrow.
DSO
DSO = (Accounts Receivable ÷ Credit Sales) × Days in Period
Higher AR relative to sales, or a longer collection lag, pushes DSO up. The levers are billing sooner and collecting sooner.
Why DSO climbs
- Invoices go out late: batched at month-end instead of on delivery
- Quotes are re-keyed into invoices, adding delay and errors
- Nobody chases overdue accounts until they are badly aged
- Payments reconcile slowly, so AR looks worse than it is
- Terms drift because they are negotiated per invoice
The DSO-reduction framework
Five levers, in order
Bill on delivery
Send the invoice the day work is done. Convert accepted quotes to invoices instantly so there is no lag.
Standardize terms
Set default payment terms and stop re-negotiating them per deal.
Dun on a cadence
Chase by aging bucket automatically: a nudge at 1–30, escalation at 61–90.
Collect by ACH
Make paying frictionless with ACH so payment does not wait on a check.
Reconcile daily
Close payments against receivables every day so AR is accurate and DSO is honest.
How Fintra automates each lever
| Lever | What Fintra does |
|---|---|
| Bill on delivery | One-click quote, then invoice, cents-accurate, no re-keying |
| Standardize terms | Default terms carried onto every invoice |
| Dun on a cadence | Collections agent drafts reminders by aging bucket |
| Collect by ACH | ACH origination via Increase closes the receivable |
| Reconcile daily | Payments reconcile against AR; DSO and aging recompute |
Questions people ask
What is a good DSO?
There is no universal number, it depends on your terms and industry, but many SMBs target a DSO within about 10–15 days of their standard terms. What matters most is the trend: measure your current DSO, attack the biggest delay, and re-measure. A steadily falling DSO beats a one-off dip.
What is the fastest way to lower DSO?
Bill sooner and chase sooner. Sending invoices on delivery instead of at month-end, and dunning overdue accounts on a fixed cadence, remove the two biggest sources of delay. Fintra automates both: instant quote-to-invoice conversion and agent-drafted reminders by aging bucket.
How does ACH collection help DSO?
ACH removes the friction and float of paper checks. When customers can pay a Fintra invoice by ACH, originated through Increase, payment lands and reconciles faster, which pulls the collection lag, and therefore DSO, down.
Does reducing DSO require chasing customers harder?
Not harder: earlier and more consistently. Most overdue invoices are forgotten, not disputed. Automating dunning so a reminder goes out the moment an invoice ages into a bucket collects the easy cash without souring relationships, and it does more for DSO than aggressive late-stage collections.
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Bring your DSO down
Fintra bills faster and chases sooner on one ledger. Talk to us: we will map it to your stack.