Working capital · March 12, 2026 · 7 min
Your DSO number is lying to you
A single average hides the invoices that are actually trapping cash. Here is how to read aging like an operator, not a dashboard.
DSO is a blended number. Blended numbers are where cash goes to hide. A company at 48 days can look disciplined while a third of the book is rotting past 60 and the current bucket is being propped up by a handful of early-pay programs.
If you manage receivables off the headline DSO, you will optimize the wrong work. Collectors will chase small current invoices because they are easy, and the $400k dispute from February will keep accruing another month of silence.
Stop averaging. Start causing.
Rebuild the aging by why, not when. Every material invoice sits in one of a short list of states: billed dirty, waiting on a customer PO, in dispute, promised, ignored, or truly current. If you cannot tag the book that way in a week, you do not have an AR process. You have a report.
- Split DSO into current, promised, disputed, and unmanaged.
- Rank the unmanaged pile by dollars, not by collector convenience.
- Put a named owner and a next date on every invoice over your materiality line.
- Report cash pulled forward this week. Not 'touches.' Cash.
If the only number on the slide is DSO, the meeting is already a waste of time.
What a useful Monday looks like
Twenty-five minutes. Three lists: cash we will collect this week, disputes that will close or escalate, and invoices that aged another seven days with no action. If a name keeps appearing on the third list, that is a management problem, not a customer problem.
The companies that free cash do not have a more inspiring DSO target. They have an aging they can interrogate. That is the whole game.