Days Sales Outstanding

Days Sales Outstanding (DSO) is a financial metric that measures the average number of days a company takes to collect payment after making a sale. It indicates how efficiently a business manages its accounts receivable. A lower DSO suggests quicker collection of funds, improving cash flow, while a higher DSO might point to delays in collecting payments, potentially affecting the company’s financial health. Essentially, DSO helps assess the effectiveness of a company's credit and collection processes.