Should I include GST in receivables when computing DSO?

Be consistent. If receivables include GST, use credit sales including GST too. Mixing a GST-inclusive ledger with GST-exclusive sales overstates DSO.

Does offering an early-payment discount reduce DSO?

It can, but it costs margin and buyers sometimes take the discount and still pay late. Mandates and firm escalation usually work better for chronic late payers.

Is the consultation really free?

Yes. The consultation and case assessment are free, with no obligation. If you decide to go ahead, there is still nothing to pay upfront: FundRaksha Legal charges 30% only on the amount actually recovered. Court fees, if a matter goes to court, are borne by the client.

Are there any upfront fees?

No. FundRaksha Legal charges a 30% success fee, only on the amount actually recovered. If nothing is recovered, there is no success fee. Court fees, if any, are borne by you and told to you upfront.

How fast does my case start?

Within 24 hours of receiving your complete documents, a dedicated advocate is assigned and the legal notice is sent as an e-notice, followed by registered post.

Do most cases go to court?

No. About 60% of our cases settle before anything is filed, through the notice, negotiation and a payment plan. The rest go to MSME Samadhaan, a Section 138 complaint, a civil suit or arbitration, handled by the same advocate.

Do you work with businesses anywhere in India?

Yes. Notices, filings and follow-ups are handled digitally, and advocates appear wherever the matter is heard. FundRaksha works with suppliers, manufacturers, traders, distributors and service businesses in every state.

Glossary

What is days sales outstanding (DSO)?

Days sales outstanding (DSO) tells you how long, on average, your money sits with customers after you invoice them. It is the single number that shows whether your credit terms are being honoured.

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Short answer

DSO is trade receivables divided by credit sales for a period, multiplied by the number of days in that period. A DSO of 60 on 30-day terms means customers are paying, on average, a month late. Lowering DSO releases cash that is otherwise lent free of interest to buyers.

How DSO works in India

Take trade receivables from the balance sheet or ledger at period end, and credit sales from the sales register for the same period. Exclude cash and advance sales. Many Indian SMEs compute DSO quarterly with 90 days, or monthly with 30 days. A rolling three-month DSO smooths seasonal spikes, such as festive-season dispatches.

DSO is an average, so it hides concentration. One large buyer 200 days late can push DSO up even when every other buyer pays on time. Always read DSO alongside the ageing report.

Why it matters for getting paid

Every day of DSO is working capital you finance, usually through an overdraft or cash credit limit. A rising DSO is often the first sign that a buyer is under stress, long before a cheque bounces. Unpaid invoices also carry GST that you have already deposited, and the limitation period keeps running. Tracking DSO monthly tells you when reminders are no longer enough and a legal notice is needed.

How FundRaksha uses it

FundRaksha Collect brings DSO down at the source with automated payment reminders and UPI Autopay or NACH mandates, for a 1% fee on what is collected. Invoices that are already well past due move to FundRaksha Legal, where a dedicated advocate sends a notice within 24 hours and charges 30% only on recovery. A free consultation reviews your ledger and DSO.

Worked example (hypothetical)

A Rajkot pump manufacturer has trade receivables of ₹1,20,00,000 at the end of a quarter in which credit sales were ₹1,80,00,000. DSO = (1,20,00,000 ÷ 1,80,00,000) × 90 = 60 days. Its terms are 30 days, so buyers are paying a month late on average. Average daily credit sales are ₹2,00,000 (₹1,80,00,000 ÷ 90). If reminders and mandates bring DSO down to 45 days, receivables fall to about ₹90,00,000, releasing ₹30,00,000 of cash (15 days × ₹2,00,000) without a single new sale.

Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.

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Free consultation and case assessment

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Talk to a FundRaksha recovery expert for free. In one call we assess your unpaid invoices and tell you honestly what can be recovered, how, and in roughly how long. No fee for the call, no obligation, and no upfront cost if you go ahead: our fee is a percentage of what we actually recover.

A review of your invoices, purchase orders, delivery proof and the buyer’s replies
An honest assessment of recovery chances and the right route: reminders, legal notice, MSME Samadhaan, Section 138 or a civil suit
A realistic timeline and the exact cost: nothing upfront, a success fee only on recovery
A dedicated advocate assigned within 24 hours if you decide to proceed

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Keep these ready

The unpaid invoice(s) and payment terms
Purchase order, delivery challan, e-way bill or proof of service
Messages, emails or letters about the payment
For a bounced cheque: the cheque and the bank return memo

No recovery, no fee. Court fees, if any, are borne by the client and told upfront.

FAQ

Questions, answered

There is no universal figure. Compare DSO with your own credit terms: if they are close, collections are working. A DSO well above your terms means buyers are using you as a lender.

This page is general information for Indian businesses, not legal advice for your specific case. Laws, rates and procedures change; speak to an advocate before acting. FundRaksha LegalTech Pvt Ltd is a technology company; legal work is carried out by enrolled advocates.