DSO Days Payable Outstanding (DSO) is a measure of how quickly businesses pay their suppliers. It’s calculated by dividing the total amount of accounts payable, over a certain period of time, by the average daily cost of goods and services for that same period. In practical terms, this means that DSO will fluctuate depending on how much you purchase from your suppliers and how often you pay them. The lower the DSO, the better – as it indicates you’re paying suppliers in a timely and efficient manner. Knowing your DSO can help you keep better track of cash flow, ensure suppliers are paid on time, manage inventory levels, and negotiate better payment terms.