Days Sales Outstanding (DSO)
Definition
The average number of days it takes to collect cash after a sale. For DTC brands it reflects payout timing; for wholesale it reflects how fast customers pay invoices.
Want a deeper explanation?
Formula
DSO = (Average Accounts Receivable ÷ Revenue) × 365Every day of DSO is cash that has been earned but not received. When wholesale grows as a share of sales, DSO usually rises and cash gets tighter even as profit improves.
Compare DSO to the payment terms you offer. Watch for: DSO well above your terms, which means customers are paying late and someone needs to be chasing them.
Example
$90,000 average receivables on $1,095,000 of annual revenue gives a DSO of 30 days.