Days sales outstanding (DSO)

The average number of days a business waits to collect after billing, roughly accounts receivable divided by revenue times the days in the period; a measure of how much cash is tied up in unpaid invoices.

It sizes the working capital a business needs to run: the longer the DSO, the more cash sits in receivables you have to fund, so a rising DSO or a book of slow-paying clients belongs in diligence before the margins do.

In numbers: A business with $1.2M of receivables on $7.3M of revenue runs a DSO near 60 days ($1.2M / $7.3M times 365); every extra week of DSO ties up roughly $140k more cash, which is real money at a searcher's scale.