What is Days Sales Outstanding (DSO)?
Days sales outstanding measures the average number of days a company takes to collect payment from customers after a credit sale. It equals (accounts receivable / credit sales) × days in the period.
How It Works
- Take period-end accounts receivable.
- Divide by credit sales for the period.
- Multiply by the number of days in the period.
Saudi Context
Saudi B2B norms imply DSO of 60 to 90 days. ZATCA Phase 2 e-invoicing has improved DSO discipline by tightening invoicing timing.
Example
A company with SAR 6 million receivables and SAR 36 million annual credit sales has a DSO of about 61 days.