What is Days Sales Outstanding?
Average days to collect payment after a sale.
How to calculate it
Calculate Days Sales Outstanding as: (Accounts receivable / Revenue) × Days in period. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
$150k receivables / $1.2M revenue x 365 = 46 days to collect. Aim near your terms (e.g. net-30).
Example 2
$180k receivables on $1.5M revenue over 365 days -> 44 days. Tightening collections cuts it to 38 days, releasing cash for operations.
Why it matters
Days sales outstanding (DSO) is the average number of days to collect payment after a sale and is a direct driver of cash flow and credit risk. Lower DSO means cash returns to the business faster and frees up working capital. Mixing cash and credit sales in the calculation distorts it, so the denominator should reflect credit sales where possible.
Benchmark context
Aim near or below your stated payment terms; a DSO meaningfully above terms (for example 60 days on net-30) points to collection issues.
Common pitfalls
Mixing cash and credit sales in the denominator.
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