Days sales outstanding (DSO) is a metric that measures the average number of days it takes a business to collect payment after making a sale on credit. It tells you how long your money sits in accounts receivable before it actually lands in your bank account. A lower DSO means you are collecting faster, which is generally healthier for cash flow.
How it works
The standard formula is straightforward. Divide your accounts receivable by your total credit sales for a period, then multiply by the number of days in that period.
DSO = (Accounts receivable / Total credit sales) x Number of days
For example, if you have 60,000 in outstanding receivables and 180,000 in credit sales over a 90-day quarter, your DSO is (60,000 / 180,000) x 90, which equals 30 days. On average, you wait a month to get paid.
Why it matters
DSO is a direct read on your working capital. A rising DSO ties up cash you could be using for inventory, payroll, or growth, and it can flag customers who are slow to pay or credit terms that are too loose. Tracking it over time helps you spot collection problems before they become cash crunches.
How it applies to B2B on Shopify
Standard Shopify checkout collects payment instantly, so DTC orders effectively have a DSO of zero. B2B is different. Wholesale buyers often expect net terms (net 30, net 60), which is where DSO becomes relevant. The clock starts the moment a quote is accepted and an invoice or order is issued.
Getting a quote to a buyer quickly and making it easy to accept and pay shortens the front end of that cycle. When accepted quotes convert into checkout-ready orders the buyer can pay in a few clicks, you remove friction that would otherwise push out your collection time. See the B2B quoting glossary for related terms like net terms and accounts receivable.