Days Sales Outstanding (DSO) is a widely used method to help evaluate how effective a company is at collecting receivables. This metric used to measure the average number of days it takes a company to collect what is owed to them after a sale has been completed. Put in fewer words, it is the average collection period. There is much to know about measuring and interpreting DSO, and we have a few words of caution as well when analyzing DSO. Continue reading
What is DSO ?
Days Sales Outstanding (DSO) is a simple measure of how long it takes for you to collect an invoice. The goal is to have the lowest DSO possible, this means that the company quickly recovers payment on accounts receivable. A high DSO means in takes the company longer to collect accounts receivable, this is an issue for many companies.
DSO is calculated as: Continue reading