The AFP Payments Guide series examines payments-related topics that are developed via interviews with treasury professionals. Presented as quarterly case studies with practical applications and tools to help you make informed decisions about key payment services.
AFP Payments Guide: Reducing DSO for Better Cash Flow
The 2025 AFP Payments Guide: Reducing DSO for Better Cash Flow, underwritten by SAP Taulia, offers a comprehensive look at how businesses can shorten their Days Sales Outstanding (DSO) and unlock working capital. From lockbox services to AI-powered automation, this guide is packed with insights, tools, and real-life examples to help you take control of your cash flow.
“For companies looking at top-line revenue growth, DSO, not just the number of contracts signed, is an important indicator of revenue that will actually hit the books. DSO can help answer the question of whether the product is delivering and customers are being served.”
— Riya Grover, CEO, Sequence
What’s Inside the Guide
How to Calculate Days Sales Outstanding (DSO)
Understanding your Days Sales Outstanding (DSO) is the first step toward improving cash flow. DSO measures how long it takes your company to collect payment after a sale — and tracking it over time can reveal critical trends in customer behavior and financial health.
Why It Matters
A high DSO means slower payments and tighter cash flow. A low DSO means you're collecting quickly and giving your business more flexibility and financial strength. The guide provides a formula to help spot seasonal patterns, identify collection issues and make smarter decisions about credit policies and customer relationships.
What DSO Tells Reveals About Your Business
Days Sales Outstanding (DSO) is more than just a number — it’s a window into your company’s financial health and customer relationships.
- High DSO: Indicates delayed payments, potential cash flow strain, and possible issues with customer satisfaction or credit policies.
- Rising DSO: A warning sign that may point to unhappy customers, extended payment terms, or poor credit decisions.
- Low DSO: Signals faster collections, stronger cash flow, and greater flexibility for growth and investment.
Why It Matters
DSO helps you understand how efficiently your business converts sales into cash. It reflects not just revenue, but how well your product delivers and how satisfied your customers are.
Best Practices to Reduce DSO
Reducing Days Sales Outstanding (DSO) is not only about getting paid faster, it’s about building smarter, more efficient financial operations. The 2025 AFP Payments Guide: Reducing DSO for Better Cash Flow outlines proven strategies that help businesses improve cash flow and customer relationships.
You'll discover:
- How to simplify and accelerate payment processing
- Ways to make it easier for customers to pay on time
- Techniques for improving billing accuracy and customer insight
- The role of automation and AI in transforming AR
- How to balance technology with personal customer relationships
Why It Matters
These practices help reduce friction in the payment process, improve transparency and ensure your team is aligned with customer needs.
Preparing for the Challenges Ahead
In a time when cash flow can make or break a business, understanding and reducing DSO is more than a financial tactic — it’s a strategic advantage. The AFP Payments Guide: Reducing DSO for Better Cash Flow equips finance professionals with real-world strategies needed to optimize accounts receivable and strengthen financial resilience.
Who Should Use This Guide?
- Accounts Receivable (AR) Professionals - Learn how to streamline collections, reduce delays and apply automation to improve efficiency.
- Finance Managers & Controllers - Gain insights into how DSO impacts cash flow and working capital.
- Treasury & Cash Management Teams - Discover strategies to unlock liquidity and prepare for economic uncertainty.
- Credit & Collections Specialists - Understand how to assess customer creditworthiness and collaborate more effectively on overdue accounts.
- CFOs & Financial Executives - Use DSO as a performance metric to guide strategic decisions.
- Operations & Business Process Leaders - Identify inefficiencies in the order-to-cash cycle and explore technology-driven solutions.