Days sales outstanding
The average number of days a business takes to collect payment after making a sale on credit, and the supplier-side counterpart to days payable outstanding.
Days sales outstanding (DSO) measures how long, on average, a business waits to be paid by its customers. It is usually calculated as trade receivables divided by credit sales for a period, multiplied by the number of days in that period. A rising DSO means cash is taking longer to arrive.
DSO is the mirror image of days payable outstanding (DPO). Every day a buyer adds to its DPO is, in aggregate, a day added to its suppliers' DSO. Treating the two as separate metrics, each optimised by a different party, is how one side's working capital gain becomes the other side's cash-flow problem.
Like DPO, DSO is an average and hides the detail that matters: which customers pay late, by how much, and whether it is getting worse. Payment behaviour data at the level of the individual relationship gives suppliers a far better basis for credit decisions and cash forecasting than a single ratio.