DSO (days sales outstanding) is the average number of days a business takes to collect payment after a credit sale: receivables divided by credit sales for a period, times the days in it. Every day it rises is cash lent to customers for free: on ₹36 crore of annual credit sales, one day is roughly ₹10 lakh.
In OneFinOps, the Collections Agent works the late part of that number daily.
Key takeaways
- DSO = (Accounts receivable ÷ Credit sales) x Number of days.
- Judge it against your payment terms and your own trend.
- Only days delinquent, not best possible DSO, is a collections problem.
DSO formula
DSO = (Accounts receivable ÷ Total credit sales) x Number of days in the period
Use period-end trade receivables, credit sales only, and the same period for sales and days. Receivables include GST, so use sales including GST, and move customer TDS out of receivables.
A Hyderabad supplier, Q2 FY 2026-27 (92 days), net 45 terms: credit sales ₹5,52,00,000, receivables ₹3,60,00,000, of which ₹2,30,00,000 is not yet due.
- DSO = (3,60,00,000 ÷ 5,52,00,000) x 92 = 60 days.
- Best possible DSO = (2,30,00,000 ÷ 5,52,00,000) x 92 = about 38 days.
- Average days delinquent = 60 - 38 = 22 days, and your AR aging report shows who.
To run the numbers for your own business, use the DSO, DPO and cash conversion cycle calculator.
What is a good DSO?
A good DSO sits close to your payment terms and is stable or falling. On net 30, a DSO above 40 deserves attention. There is no official Indian benchmark; these ranges are indicative:
| Type of business (India) | Common terms | Indicative DSO range |
|---|---|---|
| FMCG and distribution | 7 to 30 days | 15 to 40 days |
| SaaS and subscription | Advance or 15 to 30 days | 20 to 50 days |
| IT and professional services to corporates | 30 to 60 days | 45 to 80 days |
| Manufacturing and auto components | 45 to 90 days | 50 to 90 days |
| EPC, infrastructure and government | Milestone-based, with retention | 90 to 180+ days |
How to reduce DSO
- Invoice the same day goods leave or a milestone is signed.
- Get the invoice right first time: GSTIN, PO number and, above ₹5 crore aggregate turnover, an e-invoice IRN.
- Remind 5 to 7 days before the due date.
- Follow a fixed dunning ladder: reminder, call, escalation, credit hold.
- Apply cash daily and move TDS to TDS receivable the same day.
- Give disputes an owner and a deadline.
How OneFinOps handles DSO
A dashboard can tell you DSO is 60. The Collections Agent works the 22 days of delinquency directly. It ranks every open invoice by cash at risk, chases each promise to pay on its date, and matches remittances as they land, so DSO reflects cash received that day rather than at month end.
People make the calls that affect the relationship: a customer over its credit limit goes to the credit controller with the exposure shown.
Because invoicing, collections and cash application share one record, the number you report is the number the team is working.
See how the Collections Agent works