DSO = (accounts receivable ÷ credit sales) × days in period. If you have ₹60 lakh outstanding on ₹2 crore of quarterly credit sales, DSO is 27 days. Every day of DSO on ₹2 crore a quarter is about ₹2.2 lakh of working capital.
What a good DSO looks like
Compare DSO to your stated credit period. If you give 30 days and your DSO is 75, half your receivables are overdue. Track it monthly and by customer; the customers driving the number up are the ones to move to advance, mandates or legal action.
How to reduce it
- Set up UPI Autopay or NACH mandates at the point of sale
- Send automated reminders on a schedule, over WhatsApp, SMS and email
- Check buyers before extending credit
- Hand over accounts past 60 days to a dedicated advocate; FundRaksha sends the notice within 24 hours after a free consultation