Days Sales Outstanding (DSO) is the metric measuring average days from invoice to cash collection, calculated as (A/R ÷ Revenue) × days in period. It measures how quickly customers pay and how efficiently a company collects receivables. It's the standard collection-efficiency metric; lower DSO means faster cash conversion.
The math:
DSO = (Accounts Receivable ÷ Total credit sales) × Number of days in period
Example: $5M revenue in a 90-day quarter, $1.5M A/R at quarter-end.
DSO = ($1.5M ÷ $5M) × 90 = 27 days.
This means on average customers pay 27 days after invoice.
Benchmarks by business model (2025):
| Business model | Typical DSO |
|---|---|
| Consumer / B2C (credit card) | 0-3 days |
| SaaS with auto-pay (monthly) | 5-15 da... |