DSO (days sales outstanding)
The average number of days it takes to collect an invoice.
Last reviewed 12 September 2026
DSO turns a vague feeling — clients pay slowly — into a number you can improve. Dropping DSO from 62 to 40 days can free more cash than a month of cost cutting.
Measure it per client. One large late payer usually distorts the whole average.
Formula
DSO = (Accounts receivable ÷ Revenue) × Days in period
Frequently asked
What is dso (days sales outstanding)?+
The average number of days it takes to collect an invoice. DSO turns a vague feeling — clients pay slowly — into a number you can improve. Dropping DSO from 62 to 40 days can free more cash than a month of cost cutting. Measure it per client. One large late payer usually distorts the whole average.
How do you calculate dso (days sales outstanding)?+
DSO = (Accounts receivable ÷ Revenue) × Days in period
Why does dso (days sales outstanding) matter for founders?+
Measure it per client. One large late payer usually distorts the whole average.
Related terms
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