At its simplest, Days Sales Outstanding (DSO) Sales is a measure of the average length of time it takes for a company to receive payment after making a sales transaction. It’s calculated by dividing outstanding sales (the amount of unpaid invoices) over the last 365 days, by net credit sales for the same period. In other words, DSO Sales shows how quickly customers pay their bills. A low DSO Sales rate indicates that customers are paying on time and usually means higher cash flow, while a high DSO sales rate can indicate bad debt and financial difficulty. Knowing your business’s DSO Sales ratio gives you the insight you need to make informed decisions about purchasing, pricing, and inventory management.