Accounts Receivable – Days Sales Oustanding

Your cash flow will hinge on your ability to keep your accounts receivable in check. The older the outstanding invoices, the higher the risk of delinquency. There are several ways to measure the efficiency of your collection efforts, one of which is calculating the Days Sales Outstanding ratio; also know as your DSO. The DSO measures how often you turn your accounts receivables over. The lower the figure, the more efficient you are at collecting outstanding invoices.