# DSO (Days sales outstanding)

> Days sales outstanding (DSO) is the average number of days your customers take to pay you after a sale. It is receivables divided by credit sales, multiplied by the days in the period; a lower DSO means your sales turn into cash faster.

In EaseDesk: EaseDesk shows DSO as debtor days (sundry debtors ÷ sales × days in the period) under Accounts → Financial statements → Ratios, for any period and against last year. Reports → Receivables ageing shows which customers are behind it.

## Why it matters to your business

DSO turns a vague feeling ("collections are slow") into one number you can track every month. At
₹1,00,000 of sales a day, every extra day of DSO is another ₹1,00,000 stuck with customers, money
you either borrow at interest or do without. A rising DSO is often the first sign that a large
customer is in trouble or that follow-ups have slipped.

## How it works

DSO = trade receivables ÷ credit sales for the period × number of days in the period.

Suppose your receivables on 30-06-2026 are ₹18,00,000 and your credit sales from 01-04-2026 to
30-06-2026 (91 days) were ₹45,00,000.

DSO = ₹18,00,000 ÷ ₹45,00,000 × 91 = about 36 days.

If your standard credit period is 30 days, customers are paying about six days late on average.
Bringing DSO down to 30 days would release roughly ₹3,00,000 of cash (six days of sales at about
₹49,500 a day).

## Common mistakes

- **Mixing figures with and without GST.** Receivables include GST, while sales in your P&L do not.
  At an 18% rate, that alone makes DSO look about 18% higher. Compare like with like, and read the
  trend rather than a single month.
- **Including cash sales.** Counter sales paid on the spot lower DSO and hide slow credit customers.
  Use credit sales where you can.
- **Only the average.** A DSO of 40 days can hide one customer at 120 days. Look at the ageing too.
- **Year-end only.** A DSO worked out from year-end balances misses seasonal peaks. Track it monthly.
- **Measuring without acting.** DSO only improves when someone owns collections: a weekly list of
  overdue customers, a call to each, and a promised date recorded against every large due.

## Questions

### What is a good DSO?

It depends on the credit period you offer. Compare DSO with your own terms. If you give 30 days and your DSO is 55, customers are paying on average about 25 days late.

### Is DSO the same as debtor days?

Yes. Indian accountants usually call it debtor days or the debtors collection period; the calculation is the same.

### How can I reduce my DSO?

Agree a clear credit period with each customer, invoice the same day you deliver, send reminders before and after the due date, make paying easy with UPI or a payment link, and hold further credit for customers who are far behind.

### What is the difference between DSO and DPO?

DSO measures how long customers take to pay you. DPO measures how long you take to pay vendors. The gap between them, together with how long stock sits, decides how much working capital you need.

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Source: https://www.easedesk.com/glossary/dso · Updated 2026-09-28 · EaseDesk