Calculating Days Sales Outstanding (also known as DSO) is a measurement of the average number of days that it takes a company to collect payment after a sale has been made. This metric is an important indicator of how efficiently a business is managing its accounts receivable and is used to measure liquidity and credit risk. High numbers indicate a company may be having difficulty collecting payments, while low numbers indicate better cash flow management. By tracking DSO, businesses can monitor overdue payments, review collection practices and identify areas for improvement to ensure more timely collections.