Cash Flow
What Is Days Sales Outstanding (DSO)?
Days Sales Outstanding (DSO) measures the average number of days between making a sale and collecting cash. For DTC on Shopify, DSO is near zero because card processors settle within 1 to 3 business days. For wholesale, DSO runs 30 to 75 days. The mistake most founders make is blending the two. A blended 18-day DSO can hide a 55-day wholesale problem that is the actual cash drain.
Days Sales Outstanding (DSO) is the average number of days between making a sale and collecting cash. For DTC ecommerce it's near zero. For wholesale or B2B it can dominate working capital.
How DSO is calculated
DSO = (Accounts Receivable ÷ Revenue) × 365
Use AR at period end (or average AR if smoothing is needed).
Example
A multi-channel brand: $24M annual revenue, $1.6M average AR (mostly wholesale receivables). DSO = ($1.6M ÷ $24M) × 365 = 24.3 days. Heavily weighted by wholesale exposure, the DTC portion is near-zero DSO.
What's a typical DSO?
- DTC Shopify: 03 days (payment processor settlement)
- Amazon FBA: 14 days (Amazon's standard payout cycle)
- Wholesale to retailers: 3075 days
- B2B custom payment terms: 45120 days
- Subscription DTC: often negative (prepaid)
For public DTC comp data see DSO public DTC 2026.
The most common mistake
Reporting blended DSO across DTC + wholesale without segmenting. A blended 18-day DSO hides that DTC is 1 day and wholesale is 55 days. The actionable insight lives in wholesale, but only if you split it out.
Frequently Asked Questions
why is DTC DSO so low?
Card processors settle within 1-3 business days. DTC is the closest thing to instant cash in physical commerce.
how do I reduce wholesale DSO?
Factor AR, offer 2/10 net 30 discounts, or move large accounts to credit card.
does DSO matter for pure-play DTC?
Less, already near zero. Action lives in DIO.
Related Terms
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Need a CFO to segment DSO across your channels? Talk to a CFO.