What is Daily Sales Outstanding (DSO) in Retail? Explained

Daily Sales Outstanding (DSO) is a financial metric crucial for retail businesses, representing the average number of days required to collect payment after a sale. This metric serves as a key indicator of a company's accounts receivable efficiency. A lower DSO suggests swift cash conversion, while a higher DSO may indicate delayed collections. Retailers use DSO to evaluate credit and collection policies, optimize cash flow, and enhance financial operations. Efficient DSO management is vital for sustaining healthy liquidity and financial stability in the competitive retail landscape.