The average number of days it takes to collect payment after a sale. Lower is better — high DSO means cash is tied up in unpaid invoices. Formula: Accounts Receivable ÷ (Revenue ÷ 365).
How to calculate it
DSO estimates days to collect receivables. A common approximation is ending receivables ÷ credit sales × days in period. Using total sales as a proxy may distort the result.
With $90,000 receivables, $750,000 annual sales, and 365 days, the rough DSO is 43.8 days.
Where this connects to Impresa
You may encounter this concept when reviewing Cash Flow Engine. Start with the underlying inputs and check the applicable reporting period before interpreting the result.
Read the Cash Flow Engine guideDefinitions here explain the concept. Accounting treatments, formulas, and industry comparisons may vary. Use your own records and qualified advice for material decisions.