What is Days Sales Outstanding?

Days sales outstanding, or DSO, is the average number of days it takes a company to collect payment after a sale has been made. It is also a metric for AR, or accounts receivables. DSO is typically reported and evaluated on a monthly, quarterly, and annual basis. It’s important to understand DSO norms over a 12-month period because your numbers may vary month to month due to natural business cycles or seasonality of your business.

As soon as your DSO rises above the norm, it means it is time to take action!