Business, finance and operations
Days sales outstanding (DSO)
- Business, finance and operations
Definition
The average number of days a business takes to collect payment after making a credit sale.
Also called
DSO, Days sales outstanding
For your role
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Why it matters
Slow collection ties up cash and can hide customers in difficulty. Comparing DSO with payment terms shows how well credit control is working.
Where it is used
Credit control reports, cash flow forecasts and working capital reviews. Used by credit controllers, accounts receivable teams, treasury and financial controllers.
How to calculate it
DSO = trade receivables ÷ credit sales in period × days in period
Worked example
At 30 September 2025 Raket Parts B.V. was owed €10,304,850 by customers. Revenue for July to September (92 days) was €18,476,412. DSO = €10,304,850 / €18,476,412 x 92 = 51.3 days.
Most Raket customers (398 of 436) have 30-day payment terms, so customers are paying about three weeks later than agreed on average.
Raket Parts B.V. is a fictional company created for Insyt.
Definitions vary. Organisations use different periods (last month, last quarter, a year), period-end or average receivables, and total or credit-only sales, which can move DSO by many days. Check how your organisation calculates it.