Days Sales Outstanding

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The term Days sales outstanding (DSO) and collection period is the number of days from the date of invoice (invoice date) on the to-cash bank account disappear or at the box office of the supplier. The term turnover period of the receivables or liabilities is also used synonymously (see terms of payment ). This key figure serves as an efficiency indicator for the dunning and accounts receivable management of a company. The smaller this figure, the better the process runs and the more economical it is for the company. The annual average DSO is calculated as follows:

 DSO = durchschn. Forderungsbestand : (Bruttoumsatz : 365)

Payment behavior in a European comparison

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

The average payment term in Germany is 31 days. However, the claims will only be settled after 45 days (DSO), which corresponds to a payment delay of 14 days. This puts Germany in the middle of Europe. The results from Switzerland and Austria show roughly similar delays. The countries Portugal (38 days in arrears) and Italy (23 days) show significantly worse payment behavior.

Overall, the payment duration has deteriorated by more than a day on a pan-European average compared to 2005. For a company with a turnover of 30 million euros, this means that it has to take out an additional 100,000 euros in bank loans.

Reasons for poor payment behavior

The main reasons for the poor payment behavior are liquidity problems and insufficient bank credit. In some cases, invoices are paid late because this is considered a cheap form of financing.

Companies with payment difficulties are extremely selective when it comes to paying their obligations: first, invoices from the most important suppliers are paid, followed by invoices from the public sector (taxes, levies, etc.). Third, interest and amortization are paid by banks and finance companies. Suppliers who are interchangeable for their own production are far behind - regardless of the amount and age of the existing payment obligations.

literature

• Intrum Justitia: European Payment Index report, overview of payment behavior, annual update (spring); Download: www.europeanpayment.com