Xero Metric
Accounting
DSO = (Accounts Receivable / Total Credit Sales) × Days in Period
Days sales outstanding (DSO) measures the average number of days it takes to collect payment after an invoice is raised. It is the most direct measure of the efficiency of your credit and collections process.
Full guide: definition, formula, and benchmarksXeroAccountingDays Sales Outstanding
Days sales outstanding (DSO) measures the average number of days it takes to collect payment after an invoice is raised. It is the most direct measure of the efficiency of your credit and collections process.
How to calculate days sales outstanding
Why days sales outstanding matters for Xero users
Every day of DSO is a day of working capital tied up in customer debt. A rising DSO quietly starves the business of cash even while profit looks healthy, and often signals that a few large customers are paying slowly or that collections are under-resourced.
Xero users can break DSO down by customer, segment, or sales rep to see exactly who is driving the number and where to focus collection effort.
Understand and act on days sales outstanding with KPI Tree
Query the Xero MCP `list-aged-receivables-by-contact` report and the invoices list, or sync Xero invoices and contacts into your warehouse, and let KPI Tree compute DSO rolling over a 30-, 60-, or 90-day window. Decompose the metric by customer segment and invoice age bucket to isolate where collections are slipping.
Assign ownership to your AR or revenue operations lead and set alerts when DSO exceeds the business's target payment terms by a defined margin.
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Related Xero metrics
Operating Cash Flow
AccountingMetric Definition
Operating cash flow measures the cash generated (or consumed) by the core trading activity of the business over a period. Unlike profit, it is not distorted by accruals, non-cash items, or timing of invoices.
Accounts Receivable Ageing
AccountingMetric Definition
Accounts receivable ageing groups outstanding customer invoices into age buckets (current, 1-30, 31-60, 61-90, and 90+ days past due). It is the single clearest view of collection health and customer payment behaviour.
Cash Runway
AccountingMetric Definition
Cash Runway (months) = Cash Balance / Monthly Net Burn
Cash runway measures how many months the business can continue operating at its current net burn rate before cash runs out. It is the single most important survival metric for any business spending more than it earns.
Days Payable Outstanding
AccountingMetric Definition
DPO = (Accounts Payable / COGS) × Days in Period
Days payable outstanding (DPO) measures the average number of days it takes the business to pay its suppliers after receiving a bill. A higher DPO preserves cash for longer but can damage supplier relationships if stretched beyond agreed terms.
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