The most important survival metric for any business : DSO

What is DSO

Daily sales outstanding or DSO is the number of days it takes a business on an average to get paid after it raises an invoice. To understand this better, consider a business with 100 customers. If all the 100 customers pay the invoices raised by the business in exactly 45 days every time throughout the year the DSO value for that business will be 45 days

How is DSO calculated ?

 DSO is calculated by dividing the value of receivables by the average sales per day

What is a good DSO value

Usually companies have DSO values around 30 or less. This value again depends upon the industry you operate in