# Days sales outstanding (DSO)

The average days a business waits to be paid after invoicing.

Roughly, it is 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](https://searchspheresource.com/glossary/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](https://searchspheresource.com/glossary/searcher)'s scale.

Source: https://searchspheresource.com/glossary/days-sales-outstanding
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