DSO - for Days Sales Outstanding - is an important KPI to keep an eye on especially in fast-growing SaaS companies. It represents the number of days it takes your invoices to be paid by your clients. It, therefore, has an influence on your company’s cash flow. It also signals the efficiency of your cash management process.
There are 2 ways to calculate Days Sales Outstanding:
- The simple method: a simple formula that calculates the average number of days it takes for your customers to pay your company.
- The countback method: a more complicated and accurate way to find your DSO, where you go back month-by-month over a period of time.
Need help calculating your DSO? Check out our free spreadsheet that helps you calculate, interpret and reduce it!