Days Sales Outstanding

The term Days Sales Outstanding (DSO ) and collection period is the number of days that elapse from the date of invoice (invoice date) until payment is received in the bank account or at the box office of the supplier. Synonym is the term turnover period of receivables or payables used (see payment terms ). This code serves as an efficiency parameter for the dunning and credit management of a company. The smaller this ratio, the better the process is running, the more profitable it is for the company. The DSO is calculated as mean as follows:

DSO annual average = avg. Receivables ( gross sales: 365 ). Payment behavior in European comparison

An international study, the European Payment Index, which is compiled annually by Intrum Justitia, measured at regular intervals by means of surveys of companies, the payment behavior in over twenty European countries, including based on the Days Sales Outstanding.

The average payment period in Germany is 31 days. Be paid the claims but only after 45 days (Days Sales Outstanding ), which corresponds to a late payment of 14 days. This puts Germany in the European average. The results from the Switzerland and Austria show roughly similar delay deadlines. A significantly worse payment behavior, the countries Portugal ( 38 days delay in payment) and Italy (23 days).

Overall, the duration of payments has deteriorated in the European average compared to 2005 again by more than one day. For a company with a turnover of 30 million Euro, this means that it must accept € 100 000 additional bank loans.

Liquidity difficulties as the main reason

Main reason for the poor payment behavior liquidity difficulties and insufficient bank loans. Partial invoices are paid late and therefore, because this is considered cheap form of financing.

Companies with financial difficulties behave in paying their obligations very selective: First bills are paid of the main suppliers, followed by accounts of the government ( taxes, duties, etc.). Thirdly, interest and amortization of banks and finance companies are paid. Suppliers, which are interchangeable for their own production, rank far behind - regardless of the amount and age of the existing payment obligations.