Lowering DSO rarely works by just calling more aggressively or sending reminders more tightly. A low DSO on your dashboard reveals little about where your cash is truly tied up. Averages mask risks: a single strategic customer, a recurring dispute, or poor master data can hold your working capital hostage for months.
Anyone looking to improve DSO must address the root causes. In this article, you’ll learn which 12 DSO killers quietly—or brutally—undermine your cash flow and how to tackle them within your Order-to-Cash process.
Why DSO can be misleading
DSO doesn't tell you:
- Where money is stuck (clients, countries, segments)
- Why payments are delayed (root causes in O2C)
- Whether the risk is increasing or decreasing (early warnings)
Effective accounts receivable management therefore doesn’t start with the average, but with the underlying patterns.
Interesting read: Everything about credit reports
The 6 silent DSO killers (assassins)
1. Dispute backlog: the silent cash stop
Problem: Unresolved price or delivery disputes block payments.
Approach: Triage within 48 hours, ownership by dispute type, and managing turnaround time.
2. Poor master data: invoices that never arrive
Problem: Wrong legal entity, AP channel, or missing PO.
Approach: Periodic master data checks for top accounts and strict invoice requirements.
3. Unmatched cash: money received but not matched
Problem: Payments without a reference remain outstanding.
Approach: Mandatory remittance, automatic matching, and unmatched cash as a KPI.
4. Rebates and credit notes block payment
Problem: Clients wait for reconciliation and pause payments.
Approach: Set fixed reconciliation dates in both contract and process.
5. POD issues: no proof no payment
Problem: Missing Proof of Delivery delays payment.
Approach: Standard POD pack linked to order and invoice.
6. Dunning blind spots in strategic accounts
Problem: 'call the client later'
Approach: Risk-based dunning with clear escalations.
The 6 active DSO killers (DSO increasers)
1. Term creep: payment terms are extending
Problem: Exceptions become the norm.
Approach: Strict terms governance and visibility into the cost of cash.
2. Late billing: giving away DSO
Problem: Invoicing occurs days after delivery.
Approach: Delivery-to-invoice time as an operational KPI.
3. No credit gate
Problem: Deliveries continue despite late payments.
Approach: Strict credit rules with explicit exceptions.
4. Stop-ship too late
Problem: Exposure grows until just before default.
Approach: Early warning signals and clear triggers.
5. Structural dispute creation
Problem: The same errors keep causing new disputes.
Approach: Fix the top 3 causes and track recurrence.
6. No segmentation in collections
Problem: A lot of work, little impact.
Approach: Prioritize based on exposure × risk × overdue.
Where external data helps lower DSO
External data isn’t a magic solution, but it is effective for:
- Early detection of credit risk
- Differentiation in payment terms
- Prioritizing in collections
Think of:
- Credit risk indicators
- Payment behavior
- Legal and insolvency events
- Corporate group structures
- Sector and country risks
Interesting read: Use external data to lower your DSO
The real quick win
Stop focusing on a single DSO average. Anyone looking to improve cash flow should focus on:
- Root causes
- Turnaround times
- Risk based actions
Lowering DSO isn’t a collections problem. It’s risk management across the entire Credit Life Cycle.
