AR glossary
What is Days Sales Outstanding (DSO)?
Days Sales Outstanding is the average number of days a business takes to collect payment after making a sale on credit. Lower is better: cash comes in sooner.
Formula
DSO = (Accounts receivable ÷ Credit sales in the period) × Days in the period
Example
You are owed ₹1.2 Cr today and made ₹3 Cr of credit sales in the last 90 days. DSO = (1.2 ÷ 3) × 90 = 36 days.
Why it matters
DSO is the quickest way to see whether collections are keeping up with sales. Rising DSO with flat sales means cash is getting stuck. Compare it with your payment terms: Net 30 terms and a 55-day DSO means debtors pay about 25 days late on average.
In Creditouch
The dashboard shows DSO, the best possible DSO for your terms, and the trend against the previous 7, 30 or 90 days.
See Dashboard