What is Days Sales Outstanding (DSO)?
Days Sales Outstanding (DSO) is a measure of the average number of days that a company takes to collect revenue after a sale has been made. DSO is often determined on a monthly, quarterly or annual basis and can be calculated by dividing the number of accounts receivable during a given period by the total value of credit sales during the same period, and multiplying the result by the number of days in the period measured.
A low DSO value means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect the monies. Historically, large companies take 45 days to pay smaller vendors and suppliers.
ECapital clients typically see their DSO go down with our A/R Management and Credit Protection in place.