# DSO (Days Sales Outstanding)

**DSO, or Days Sales Outstanding, is the average number of days a business takes to collect payment after making a credit sale.**

## What it means

DSO measures how fast your udhaar comes back. The common formula is:

**DSO = (Trade receivables ÷ Credit sales in the period) × Number of days in the period**

Use the outstanding balance at the end of the period and only credit sales, not cash sales.

**Example:** At the end of a 90-day quarter your buyers owe you ₹12,00,000. Credit sales during the quarter were ₹36,00,000.

DSO = (12,00,000 ÷ 36,00,000) × 90 = 30 days.

## Why it matters for getting paid

DSO tells you how much of your sales is tied up as credit. If your normal [credit period](/en/glossary/credit-period) is 30 days but your DSO is 55, buyers are paying almost a month late on average, and you are financing them.

A falling DSO means faster cash and less borrowing. Watch the trend month by month rather than a single number.

DSO is an average, so it can hide a few very old invoices. Pair it with an [overdue ageing](/en/glossary/overdue-ageing) report, built from your [khata](/en/glossary/khata), to see exactly which buyers are pulling the number up.

Ways to bring DSO down include reminders before the due date, easy UPI payment, and tracking promises. Read [how distributors can reduce DSO](/en/blog/reduce-dso-distributors).

Source: https://udhaar-wapas.com/en/glossary/dso