Why Tracking DSO Could Save Your Business

Why Tracking DSO Could Save Your Business

If you're not keeping an eye on your Days Sales Outstanding (DSO), you're flying blind
with your cash flow. DSO tells you how long it takes to get paid after making a sale, and
that number can make or break your business.

Think of it this way: Every day that invoice goes unpaid, your cash is locked up in
someone else's hands. A low DSO? Great! You’re getting paid quickly and have cash to
reinvest. A high DSO? It could mean your collections process is dragging, your
customers are slow to pay, or your credit terms are too lenient.

So, what is DSO, exactly? The formula for DSO is:
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days

This tells you the average number of days it takes to collect payment after a sale. The
lower the number, the better your cash flow.

Why it matters:

• Unlock hidden cash – Faster collections mean more working capital on hand.
• Spot red flags early – A rising DSO can warn you before real trouble hits.
  
• Sharpen your strategy – Use DSO insights to fine-tune your credit and collections
  approach.

In short, DSO isn’t just a metric—it’s a money pulse check. Monitor it. Improve it.
Because a healthy DSO means a healthier business.

Download the free DSO calculator HERE