How to reduce DSO (days sales outstanding)

Days Sales Outstanding (DSO) is the average number of days a business takes to collect payment after issuing an invoice. You reduce it by following up on every invoice from before the due date, applying the same consistent process every time, making payment effortless, and removing the human bottlenecks that let receivables drift. The biggest single lever is starting early and never missing a follow-up.

The formula: DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days. A DSO of 55 means it takes, on average, 55 days to get paid after invoicing.

What pushes DSO up: follow-up that only starts once an invoice is already late; inconsistent chasing that depends on someone having time; reminders that are easy to ignore because they come from a busy supplier; and friction at the moment of payment.

The levers that bring it down:

1. Start before the due date. A light, professional reminder before payment is due normalises on-time payment and catches problems early.
2. Be relentlessly consistent. Every invoice worked on the same schedule, every time — not when someone gets around to it.
3. Let a neutral party do the asking. An independent mediator is harder to ignore than the supplier a customer is stalling, and it keeps the relationship clean.
4. Make paying effortless. A clear payment link and on-the-spot payment plans turn "I can't pay it all now" into committed cash instead of silence.
5. Have a credible escalation path. When non-payment carries a real, escalating consequence, customers pay sooner.

This is what managed receivables does, applied to every invoice automatically — which is why ChaseFlow's early network has seen roughly a 70% reduction in DSO (early network proof; methodology available on request). In practical terms: a business waiting ~60 days now collects in under 20, so the same working capital cycles 3–4× faster.

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