Definition of this KPI:
Days Sales Outstanding (DSO) measures the average number of days it takes for a company to collect payment after a sale has been made. It is a critical metric for understanding how efficiently a company is managing its accounts receivable.
This KPI can be calculated as: (Accounts Receivable / Total Credit Sales) × Number of Days in the PeriodThe KPI will be measured as: time (e.g. years, minutes)How to interpret the KPI: lower is betterThe strategic objective to measure with this KPI: Improve cash flow by reducing the time it takes to collect receivables, thereby enhancing liquidity and enabling quicker reinvestment into business operations.