What does your payment time cost?
DSO is the average number of days from invoice to payment. The difference between your payment terms and your actual DSO is not a statistic — it is working capital sitting with your customers instead of in your account. On revenue of DKK 120m, every day of delay costs around DKK 330,000 in tied-up liquidity.
How it is calculated
- 01 DSO = (accounts receivable ÷ annual revenue) × 365. It is the snapshot of how long the money takes to come home.
- 02 The gap is the difference between your agreed payment terms and actual DSO. If the terms are net 30 and DSO is 54, customers are paying 24 days late — on average.
- 03 The gap multiplied by daily revenue is the working capital tied up in late payment. That is the number a CFO thinks in.
- 04 What moves DSO is rarely the character of your customers. It is whether the reminder actually goes out on day 1 — every time, without anyone having to remember it.
What is often got wrong
A single aggregate number hides the fact that half the arrears typically sit with very few customers. An aged receivables report shows where the problem actually is.
Net 8 does not help if the first reminder only goes out after 45 days. It is the consequence, not the number on the invoice, that moves DSO.
Then it gets deprioritised in the busy weeks — and that is precisely when arrears grow.
Frequently asked questions
What is a good DSO?
It depends on the industry and on your own terms. The interesting number is not DSO in itself, but the gap: if you are on net 30 and have a DSO of 54, customers are paying 24 days late, and those days can be converted into kroner.
How do we lower our DSO?
Through consistency, not tighter terms. Automatic reminder on day 1, formal demand on day 21, hand-over on day 32 — every time, without a discussion. That is what customers respond to.
Is DSO the same as payment terms?
No. The terms are what you have agreed. DSO is what actually happens. The difference is the whole point.
- DSO DSO (Days Sales Outstanding) is the average number of days from the moment you invoice until the money is in the bank.
- Receivables management (debitorstyring) Receivables management is the end-to-end control of outstanding invoices — from invoice to payment, reminder or debt collection.
- Aged debtors report (aldersfordelt saldoliste) The aged debtors report shows your outstanding receivables broken down by how long they have been overdue.
- Reminder cadence (rykkerkadence) The reminder cadence is the fixed rhythm your reminders go out in — who is chased when, and what happens once the deadline has passed.
The figure is one thing. The money is another.
We run the entire process — reminders with the right deadlines, debt collection and the bailiff’s court with lawyers in-house. Create a free account and send in the first case.