What is DSO?
DSO is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
DSO, or days sales outstanding, is the average number of days it takes a company to collect payment after a sale is invoiced. A lower DSO means faster cash collection. It is a core measure of billing and collections efficiency and cash-flow health.
Key takeaways
- Average days from invoice to cash collected.
- Lower is better; it means faster collections.
- Calculated from accounts receivable and revenue.
Why it matters
DSO drives cash flow. A rising DSO ties up working capital in unpaid invoices, so finance watches it to keep collections healthy and predict cash.
How Ardovo handles it
Ardovo connects deals to invoices and payment status so the numbers behind DSO stay clean, and slow-paying accounts are visible for follow-up.
Frequently asked questions
How is DSO calculated?
Divide accounts receivable by total credit sales for the period, then multiply by the number of days in the period.
What is a good DSO?
It varies by industry and terms, but many B2B companies target 30 to 45 days. The trend matters more than the absolute number.