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Definition · working capital

Days sales outstanding (DSO)

Days sales outstanding measures the average number of days it takes to collect payment after a sale, usually calculated from accounts receivable and revenue. For days sales outstanding (DSO), the useful boundary is the cash source, timing horizon, owner, liquidity exposure, and decision before options narrow.

Also known as DSO, days sales outstanding, average collection period, days receivables outstanding

Written by Pluvo TeamReviewed by Pluvo Team
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Why it matters

Understanding days sales outstanding (DSO) matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes DSO from connected AR and revenue data and traces a rising figure to the specific accounts or cohorts driving it, instead of leaving you to reconcile the aging report by hand.

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In practice

  • Liquidity example

    Finance teams use days sales outstanding (DSO) when they need to understand cash timing before a decision is made. A team might compare expected receipts, payroll, vendor payments, and debt obligations to decide what action is needed this week.

  • Pluvo example

    Pluvo computes DSO from connected AR and revenue data and traces a rising figure to the specific accounts or cohorts driving it, instead of leaving you to reconcile the aging report by hand.

In practice, teams should define days sales outstanding (DSO) with a clear source, owner, time period, and decision before they use it in reporting, planning, or operating reviews.

Understanding days sales outstanding (DSO) matters because cash decisions are time-sensitive. Teams need to know when money moves, which balance changes, who owns the next action, and what can still be changed before liquidity tightens. Pluvo computes DSO from connected AR and revenue data and traces a rising figure to the specific accounts or cohorts driving it, instead of leaving you to reconcile the aging report by hand.

A strong workflow for days sales outstanding (DSO) separates the definition from the action: first agree what the term means, then decide how it is measured, when it changes, and who is accountable for the next step.

Pluvo computes DSO from connected AR and revenue data and traces a rising figure to the specific accounts or cohorts driving it, instead of leaving you to reconcile the aging report by hand.

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FAQ

What is days sales outstanding (DSO)?

Days sales outstanding measures the average number of days it takes to collect payment after a sale, usually calculated from accounts receivable and revenue. For days sales outstanding (DSO), the useful boundary is the cash source, timing horizon, owner, liquidity exposure, and decision before options narrow.

How do you calculate DSO?

To calculate days sales outstanding (DSO), define the source data, time period, comparison basis, and owner before applying the formula. The useful answer is not only the math; it is whether the inputs and timing match the decision the metric supports.

What is a good DSO?

A good value for days sales outstanding (DSO) depends on company stage, business model, margin profile, cash position, and reporting purpose. The useful comparison is the one tied to the decision, not a generic benchmark copied across contexts.

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Sources

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