Lower your DSO: the fastest way to boost cashflow
In B2B finance, Days Sales Outstanding (DSO) is one of the clearest indicators of financial health. A high DSO means your cash is tied up in unpaid invoices. This slows down growth, increases financing costs and reduces agility. However, with automatic payments, you can dramatically shorten DSO and strengthen your cash position, without having to chase customers.
Why DSO matters to CFOs
.png DSO=Annual credit salesOutstanding receivables ×365
- Low DSO → faster cash inflow, better liquidity, fewer borrowing needs, less follow-up needed.
- High DSO → delayed cash, higher working capital requirements, reduced investment capacity and more follow-up required.
In Western Europe, the average DSO is around 45 days in B2B environments and 25 days in B2C contexts. Depending on your sector, the difference between “average” and “best-in-class” can free up millions in working capital.
How automatic payments change the equation
When customers pay via SEPA Direct Debit or another automated method, you can often collect funds just 7 days after invoicing — instead of waiting until a customer decides to pay. That’s an acceleration of 38 days in cash inflow.
For a business with €10M in annual credit sales, that’s the equivalent of freeing up over €630,000 in working capital, without taking on debt. Twikey data indicates that companies that make the strategic shift to direct debit or other recurrent payments achieve a 50% DSO reduction.
This makes for stronger liquidity, less reliance on external financing, and allows companies to reallocate capital to growth instead of plugging cash gaps because customers fall behind on their payments.
Implementation: maximizing customer adoption
High adoption starts with internal alignment. Sales, customer service, and accounts receivable must share the same mission to convert as many customers as possible to automatic payment.
Proven tactics to convince people to agree with a recurrent transaction:
- Conversion campaigns for existing customers focused on highlighting the benefits: no reminders, no late fees, total convenience.
- Onboarding integration: request a payment mandate at sign-up.
- Mandate on the invoice: use a QR code or link for instant digital authorization.
💡 Bottom line for CFOs: lowering DSO isn’t just about process efficiency but about releasing trapped capital, reducing financing costs, and gaining the flexibility to seize growth opportunities faster.
