DSO is commonly calculated as accounts receivable divided by revenue for a period, multiplied by the number of days in the period. A DSO of 45 means the business takes about 45 days on average to collect. Rising DSO can signal slower-paying customers, billing delays, or disputes.
Averages hide detail, so DSO is best read alongside the aging report and customer-level history. Industries with progress billing and retainage, such as construction, naturally carry higher DSO, which is why cash planning in those businesses needs explicit timing assumptions.