Days Sales Outstanding (DSO)
The average number of days it takes a business to collect payment after a sale is made, a measure of how quickly receivables convert to cash.
A lower DSO means a business collects customer payments faster, while a higher DSO means cash is tied up longer in unpaid invoices, directly affecting how much working capital the business needs to cover the gap.
DSO is a key input in the cash conversion cycle and is closely watched by lenders considering invoice factoring or accounts receivable financing, since it reflects how reliably and quickly a business’s customers actually pay.
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