The Days Sales Outstanding, or DSO calculation formula, is a metric used to measure the average number of days it takes for a business to collect its accounts receivable. It’s calculated by taking the amount of outstanding invoices divided by total credit sales over a certain period of time, usually one month or one quarter. The lower the DSO figure, the healthier your company is at collecting payments and managing finances as it implies customers are paying off their debts quickly. Knowing this figure can help you budget better, understand customer payment trends, identify potential issues, and ultimately, increase cash flow. Put simply, knowing your DSO can save your business!