How to reduce your DSO
Days sales outstanding is cash you have earned but not collected. Here is a practical framework to bring it down - and how Fintra automates each lever.
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
- 1
Bill on delivery
Send the invoice the day work is done. Convert accepted quotes to invoices instantly so there is no lag.
- 2
Standardize terms
Set default payment terms and stop re-negotiating them per deal.
- 3
Dun on a cadence
Chase by aging bucket automatically - a nudge at 1–30, escalation at 61–90.
- 4
Collect by ACH
Make paying frictionless with ACH so payment does not wait on a check.
- 5
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 → 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 |
Frequently asked questions
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.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Bring your DSO down
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