DSO: What your receivables are telling you - Mobius Solutions (4 Nov 2026)
Most finance teams look at revenue every month. Fewer look at how long the money takes to arrive, and that is where a business can grow on paper and still run short of cash.
Days sales outstanding (DSO) is the simplest way to see it. It is the average number of days a business waits to be paid after a sale. The standard formula is accounts receivable divided by credit sales over a period, multiplied by the number of days in that period. A rising DSO means cash is tied up for longer, whatever the sales figures say.
What DSO can and cannot tell you
DSO is a single number for the whole book. It can hide a lot. The average can look acceptable while a handful of accounts pay at 120 days and the rest pay on time, and those late accounts disappear inside it.
So read DSO with the ageing report next to it. Ageing shows how much is current, how much is 30 days overdue, 60 days, 90 days, and beyond. The shape of the ageing report usually tells you more than the average does.
Where receivables go wrong
Many overdue invoices are not caused by a bad customer. They come from a process that stopped moving:
The invoice never reached the right person. It went to a general inbox, or to someone who does not approve payments. The customer was never asked to pay, because nobody knew who should.
A dispute was raised and never written down. A delivery was late, a price was wrong, a credit note is pending. Until the dispute is closed, the invoice sits.
Nobody chased at the right time. A reminder before the due date, a call at the first missed payment, and a written promise recorded for each conversation. When these steps are skipped, a late invoice becomes an old one.
Terms were loose from the start. A payment term agreed only in conversation is harder to prove and enforce later. Put it in writing, on the invoice or in the contract.
A routine that works for small finance teams
Most of the fix is routine, not technology:
Check before the first order. Confirm who the customer is, who owns it, and who signs for it. A credit limit set against what you have checked is safer than one set against what the customer has told you.
Send the invoice to the person who approves payment. Ask for the name in writing. Keep it on the account record.
Remind before the due date. A short, friendly note a few days before payment is due prevents many late payments.
Call at the first miss. A phone call in the first two weeks finds out whether the problem is cash, a dispute, or an error in your own books.
Write down every promise. Date, amount, and who agreed it. A promise you can see is easier to hold to.
Review the ageing report every week. Look at the oldest items first, and decide on the next action for each one.
When to ask for help
Escalation is a decision, not a failure. If an account has stopped responding, if the customer disputes the debt without a clear reason, or if the amount is large enough to matter, it is time to look at the file as a whole before the next step is taken.
At Mobius Solutions, we start with a free file review. We look at the invoices, the contract, the payment record, and the correspondence, and we tell you honestly whether the account is worth pursuing and how. If we take a case on, we work on a contingency basis, so you pay a fee only when we recover. Legal fees and court costs are quoted separately and need your written approval. Nothing is agreed, and no fee applies, until you have seen our view and signed the terms in writing. We do not give legal advice. Where court action is needed, we work with a licensed lawyer in the right country.
Not sure whether an overdue account is worth pursuing? Send us the file for a
free file review: business@mobius-solutions.net
