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DSO

Days Sales Outstanding

The average number of days customers take to pay you. High DSO means profitable on paper but short of cash in reality.

Example

A DSO of 75 days means you are effectively funding your customers for two and a half months.

Formula

DSO = Accounts Receivable ÷ Total Credit Sales × Number of Days

Related terms

Cash Flow
The actual money moving in and out of your business. You can be profitable on paper but still run out of cash if money comes in late.
Working Capital
The short-term money available to run day-to-day operations — what you own that can quickly become cash, minus what you owe soon.
Accounts Receivable
Money customers owe you for work already delivered but not yet paid for. It counts as revenue, but you cannot spend it until it actually arrives.

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