Every accounts receivable team within a B2B company understands the importance of lowering their DSO. And now, you have key insights into actionable steps to make reductions in your own company to accelerate cash flow and alleviate any dependence on revolving lines of credit. The benefits for reducing DSO are valuable\u2014saving time and money to be invested back into the business.<\/p>\n\n\n\n
Low DSO is incredibly important for any B2B company. Because time is money, the longer a business has to wait to be paid, the more money they are losing. Reducing DSO frees up time, energy and investment capital that can be reallocated toward core business functions to grow the company. Companies with lower DSO have more cash flow at their disposal while businesses with higher DSO tend to have more clients on extended payment terms, referred to as credit sales.<\/p>\n\n\n\n
As an industry standard measuring stick for AR professionals within B2B companies, DSO is calculated by dividing the amount of accounts receivables during a given period by the total value of credit sales during the same period and multiplying the result by the number of days in the period measured.<\/p>\n\n\n\n