Days Sales Outstanding (DSO)
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Days Sales Outstanding (DSO). Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Days Sales Outstanding (DSO)?
The number of days, on average, required for a company to collect their outstanding accounts receivable balance (the amount of money owed by customers/clients) from customers. Days Sales Outstanding (DSO) is one of three components of the Cash Conversion Cycle.
Why should Days Sales Outstanding (DSO) be measured?
Days Sales Outstanding (DSO), sometimes referred to as Average Days in Accounts Receivable (AR), measures the quality and efficiency of the AR Department in billing customers and collecting payments from those customers after a sale of goods or services has been made. Under all circumstances, companies should look to produce a low value for this Key Performance Indicator (KPI) as the amount of time required to collect money after payment affects the company's cash flow and liquidity. Poor performance may also diminish the company's ability to pay off its own liabilities. Extended payment times may be related to inefficiency or error-prone billing processes, inconvenient payment options (e.g., payments cannot be collected through web-based means, etc.) and/or ineffective credit analysis (i.e., credit lines were extended to customers who my be unlikely to pay on-time).
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