DSO (Days Sales Outstanding)
The average number of days it takes to collect payment after invoicing — often high in GovCon.
Days Sales Outstanding (DSO) measures the average number of days it takes your business to collect payment after a sale. A high DSO means cash is tied up in unpaid invoices for a long time — exactly the situation government contractors face, because federal Net-30 to Net-90 terms (and the delays beyond them) push DSO well up.
High DSO strains working capital: you've earned the revenue, but you can't use it to make payroll or take on new work until the customer pays. Lowering effective DSO frees up cash to operate and grow.
Invoice factoring effectively reduces your DSO to days instead of months by advancing up to 90% of an invoice as soon as it's approved — without waiting for the government's payment cycle.
Frequently asked questions
What is Days Sales Outstanding (DSO)?
The average number of days it takes to collect payment after invoicing. High DSO is common in government contracting because of long Net terms, tying up working capital.
How does factoring affect DSO?
Factoring effectively shrinks your DSO from months to days by advancing up to 90% of an invoice's value as soon as it's approved, rather than waiting for the customer to pay.
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