Days Sales Outstanding (DSO)

Days Sales Outstanding (DSO) is a metric that measures the average number of days it takes a company to collect payment after a sale. Essentially, it indicates how quickly or slowly a company receives cash from its customers. A lower DSO suggests efficient receivables management and faster cash flow, while a higher DSO may signal delays or issues in collection. Businesses use DSO to monitor financial health, manage cash flow, and improve credit and collection strategies. It's an important indicator of how well a company balances sales with timely revenue collection.