Tips to Reduce DSO and Mantain Cash Flow

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HIGHLIGHTS

• A Short Introduction
• Tips to Reduce DSO
• Contact Us

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DSO, or Days Sales Outstanding measures the
average number of days that it takes your
customers to pay their invoices. A high number
indicates slow payment, which can delay cash from
hitting your account. Try automated accounts
receivable solutions to manage cash flow and
reduce your DSO.
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Tips To Reduce DSO

• Increase Visibility

Before you take any other steps, its important
to have a full and complete picture of your
receivables and payable. For DSO, make sure you
have reporting practices in place that allow you
to see which customers tend to pay late, trace
any correlations that exist with your sales
practices, and discover internal issues that
might be causing delays.
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2. Automate A/R Processes
Manual A/R processing is inefficient and costly.
By implementing Receivables Automation, you can
improve cash flow while reducing your operating
costs and improving your overall customer
experience. A cloud-based payment solution like
Troveworks can help you invoice your customers
instantly and make your collections process easier
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3. Offer More Payment Options
Another way you can quickly reduce DSO is to make
it easier for customers to pay you by offering
multiple payment methods. This provides greater
flexibility for customers while helping shift
away from less convenient options like paper
checks. Accepting alternative payment options can
help your organization stand out in an
increasingly convenience-driven world.
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4. Adjust Your Payment Terms
A good rule of thumb is that your DSO should be
within 20 of your stated payment terms. If
youre within the right range and find that your
DSO is too long you should consider gradually
reducing your payment period. If you find that
the percentage is significantly higher than it
should be its worth offering incentives and/or
charging penalties to motivate a closer alignment.
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5. Personalized Collection Plans
Another way to cut your DSO is to get strategic
about how you follow up with customers about
delayed payments. Using intelligent automation
features, you can use payment software to stay
ahead of the monthly collections process. This
way customers can apply a greater focus on
getting delinquent accounts back on track, while
actually decreasing the amount of time and effort
required to make it happen.
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6. Focus on Customer Credit Issues
The goal is to identify risky customers, both
current and new, and decide what level of credit
risk your organization is willing to face. You
should run thorough credit checks on new
customers, and consider rejecting them if their
established credit record is worse than your
predetermined threshold. If your services are in
demand, its worth eliminating bad players so
that you can focus on customers that help keep
your DSO down.
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