Days Sales Outstanding (DSO)

Healthy

Drifting

DSO

At or just above your stated terms.

DSO

Ten or more days above terms.

Signal

Terms are being honoured.

Signal

Collections or credit limits need review.

Key Takeaways

Days Sales Outstanding measures the average number of days a supplier waits to collect payment after a sale. It is the headline figure for how quickly credit turns back into cash, and a rising DSO usually shows up well before a bad-debt problem does.

What DSO measures

DSO is the average number of days between raising an invoice and collecting against it. It is a trend, not a verdict: a single month says little, and unapplied cash application can inflate it without any buyer paying late.

Measured over a period, usually a month or a quarter.

How it is calculated

Closing receivables divided by credit sales, times days in the period.
Cash sales are excluded: they never became receivables.

Count from invoice date, not order date.
Compare against your own terms, not an industry average.

Why it moves before write-offs do

DSO read against payment terms
Healthy	Drifting
DSO At or just above your stated terms.	DSO Ten or more days above terms.
Signal Terms are being honoured.	Signal Collections or credit limits need review.

A rising DSO ties up working capital that has already been earned. It usually moves a quarter or two before bad debt shows up in the ledger, which is what makes it an early signal rather than a lagging one.

See your DSO by buyer, not just in aggregate

Nuvo breaks the number down to the accounts driving it.

Shorten the cycle before the invoice goes out

Most of the delay is set at onboarding, not at collections.

Faster onboarding: Terms are live in hours, not days.
Right-sized limits: Set against verified risk rather than a guess.
Cleaner ledger: Payments apply themselves, so DSO tells the truth.

Days Sales Outstanding (DSO)

What DSO measures

How it is calculated

Why it moves before write-offs do

See your DSO by buyer, not just in aggregate

Shorten the cycle before the invoice goes out

Turn credit back into cash sooner

What’s new with Nuvo

Bringing agentic AI to the physical economy

Nuvo partners with CreditRiskMonitor

Meet the AR Suite

Days Sales Outstanding (DSO)

What DSO measures

How it is calculated

Why it moves before write-offs do

See your DSO by buyer, not just in aggregate

Shorten the cycle before the invoice goes out

Turn credit back into cash sooner

What’s new with Nuvo

Bringing agentic AI to the physical economy

Nuvo partners with CreditRiskMonitor

Meet the AR Suite