Glossary

What is days sales outstanding (DSO)?

Debtor days is the average number of days customers take to pay. The usual formula is trade debtors (accounts receivable) divided by revenue for the period, multiplied by the number of days in the period. A rising figure means cash is tied up in unpaid invoices for longer.

Also called: Debtor days

Debtor days is a cash measure rather than a profit measure. Revenue is recognized when work is done; the cash arrives when the customer pays, and debtor days is the gap. It is read alongside creditor days, which measures the same thing for supplier payments.

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FAQ

Questions people ask

What is a normal debtor days figure?
It depends on the payment terms the business offers. A business on 30-day terms with debtor days of 45 is being paid about two weeks late on average.

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