A/R Days Outstanding (also known as “Days Sales Outstanding” or “DSO”) is an important metric used to measure how effective a company’s accounts receivable process is. It helps companies visualize their overall cash flow and can be vital in predicting future earnings. In short, A/R Days Outstanding represents the average number of days that it takes for customers to pay off their invoices. This metric can be determined by dividing the total amount of accounts receivable by the net credit sales for a period, then multiplying it by the number of days in the same time frame. By tracking and monitoring A/R Days Outstanding over time, businesses can identify any bottlenecks in the payment process and take steps to prevent them from happening. Knowing your DSO can help you make informed decisions about your business’s financial health and keep your cash flow healthy!