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Measure and Manage Collection Efficiency Using DSO

Originally Published: March 2011


Days Sales Outstanding (DSO) expresses the average number of days it takes a company to convert its accounts receivables into cash. It is one of the most widely used measures employed by credit professionals to analyze the success of their efforts.

There are several ways to calculate DSO. And, when used appropriately and consistently, these calculations can help answer a variety of questions about the effectiveness of your credit and collection policies and practices. Questions like, are your credit terms in line with competitors? Are your collection procedures successful in meeting stated goals? Is your customer base risky?