Billing & Cash Flow
Days Sales Outstanding (DSO)
Agency glossary · Updated July 2026
Definition
Days sales outstanding (DSO) is the average number of days it takes an agency to get paid after invoicing. A low DSO means clients pay quickly; a rising DSO means the agency is increasingly financing its clients and its cash is tied up in unpaid invoices.
Formula
(Accounts receivable / total credit revenue) x number of days in the periodWhy it matters
Profit on paper does not pay salaries, cash does. Creeping DSO is an early warning of a cash crunch, often before it shows up in the bank.
How to lower it
Shorter net terms, deposits, online payment, and automated reminders all pull DSO down.
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