Days sales outstanding, or DSO, estimates the average number of days a business takes to collect customer receivables. A common formula divides average accounts receivable by credit sales for the period and multiplies the result by the number of days.
Quick reference for Days sales outstanding (DSO)
| Check | What it means for the transaction |
|---|---|
| Category | Orders, invoicing, accounts payable and accounts receivable |
| Record to keep | Link the order, delivery evidence, invoice, approval, adjustment and payment reference that belong to the same transaction. |
| Do not infer | An approved invoice or recorded payment does not by itself prove that funds have settled or that the open balance is reconciled. |
Days sales outstanding (DSO) and nearby terms
- Accounts receivable (AR): Accounts receivable is the amount customers owe a business for goods or services already supplied on credit.
- Order-to-cash (O2C): Order-to-cash is the process from accepting a customer order through fulfilment, invoicing, payment collection, and reconciliation.
