The Procurement Glossary » Days Sales Outstanding (DSO)

Days Sales Outstanding (DSO)

Finance & Payments

Also known as: DSO

Definition

The average number of days a company takes to collect payment from its customers.

Explanation

DSO is the receivables mirror of DPO. While more a sales metric, it matters to suppliers' cash health and appears in the cash conversion cycle. A supplier with high DSO may lean on factoring or push buyers for faster payment.

Example

A supplier's DSO of 70 days signals collection pressure that factoring could relieve.

Related terms

• Invoice Financing (Factoring) — A supplier's use of its unpaid invoices as collateral to obtain immediate cash from a financier.
• Cash Flow — The movement of money into and out of a business over time.
• Days Payable Outstanding (DPO) — The average number of days a company takes to pay its suppliers.
• Working Capital — The money tied up in day-to-day operations — broadly current assets (inventory, receivables) minus current liabilities (payables).

Frequently Asked Questions

What is Days Sales Outstanding (DSO)?

The average number of days a company takes to collect payment from its customers. DSO is the receivables mirror of DPO. While more a sales metric, it matters to suppliers' cash health and appears in the cash conversion cycle. A supplier with high DSO may lean on factoring or push buyers for faster payment.

Can you give an example of Days Sales Outstanding (DSO)?

A supplier's DSO of 70 days signals collection pressure that factoring could relieve.

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