TL;DR: Days Sales Outstanding (DSO) is the average number of days it takes to collect payment after invoicing. Lower is better. Most Australian and NZ small businesses should aim for a DSO under 45 days.
DSO measures the average days it takes to collect payment after a sale. It's one of the clearest indicators of how efficiently your business turns invoices into cash.
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days
Example: accounts receivable of $150,000, credit sales of $450,000 over 90 days: DSO = ($150,000 ÷ $450,000) × 90 = 30 days, you collect, on average, 30 days after invoicing.
It depends on your industry and terms. General guidance for AU/NZ businesses :
| DSO | Read |
|---|---|
| Under 30 days | Excellent, you collect quickly |
| 30–45 days | Good, consistent with 30-day terms |
| 45–60 days | Needs attention, customers paying late |
| Over 60 days | Cash risk, act now |
"DSO is a great diagnostic, but you can do everything right on collections and still have a 30-day hole between doing the work and getting paid. That gap is the thing, and it's exactly what on-demand finance closes."
Shane, Head of Growth, FundTap
DSO measures collection speed, but the thing that actually bites is the cash gap. Even a 30-day DSO creates a 30-day gap between earning and receiving. For high-cost, thin-margin businesses, that gap matters. Invoice finance addresses it directly, you don't have to fix your DSO to fix your cash position. FundTap's average advance runs about $32K over roughly 33 days (FundTap data, 2026).
See how FundTap works → Rated 5★ on Google (117 reviews) · 4.9★ on the Xero App Marketplace (107 reviews).
Days Sales Outstanding, the average number of days it takes to collect payment after issuing an invoice. A lower DSO means you get paid faster.
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days. For $150k AR and $450k credit sales over 90 days, DSO = 30 days.
Under 30 days is excellent and 30–45 days is good for standard 30-day terms. Over 60 days signals a cash-flow risk that needs action.
Invoice immediately, set exact due dates, send reminders before and after the due date, offer easy payment methods, and consider early-payment incentives.
DSO measures collection speed; your cash position is the actual money in the bank. Even a low DSO leaves a timing gap between earning and being paid.
It doesn't change the metric, but it removes the impact, FundTap releases invoice value within hours, so slow-paying customers no longer hold up your cash.