What is a good days sales outstanding?

Days sales outstanding (DSO) is the average number of days that receivables remain outstanding before they are collected. It is used to determine the effectiveness of a company's credit and collection efforts in allowing credit to customers, as well as its ability to collect from them.

How do you calculate Days Sales Outstanding?

The following formula is used to calculate the Days Sales Outstanding: Days Sales Outstanding = Average Accounts Receivable / Revenue x 365 days Average Accounts Receivable is the amount of accounts receivable submitted by the company within 365 days. This is set in relation to the turnover generated in the same period.

What is the ideal Days Sales Outstanding (DSO)?

The DSO meaning Days sales outstanding, or DSO, is a measure of how quickly a company can collect its money from its customers. The number represents the average time it will take for the company to collect its credit from all of its buyers or customers. The speed at which a company can collect its money plays a huge part in its operation.

What is the average collection period for Days Sales Outstanding (DSO)?

The DSO value varies greatly from industry to industry. E-commerce and retail companies typically have low Days Sales Outstanding, often in the range of 7 to 30 days. In manufacturing industries, where customers are often given longer payment terms, the DSO value can be 60 days or even higher.