Proven Data Strategies for Reducing DSO

Late-paying customers can be a major headache for businesses – causing additional pressures in an already precarious economic climate.

Keeping track of invoices is paramount. That’s where days sales outstanding (DSO) comes in. As a measurement of how long, on average, it takes customers to pay their bills, it’s a key metric of a company’s financial health. 

We explore how using data effectively can reduce DSO and optimise the utilisation of trade credit insurance to better manage risk. 

Why reducing DSO matters

Maintaining a healthy cash flow is crucial to the success of any business. Reducing DSO is one way to achieve this. With a third of UK businesses reporting a decline in cash flow in Q1 of 2025, there’s a significant need to optimise collections processes.

The longer it takes customers to pay, the more money you have tied up in unpaid invoices. By shortening payment collection times, you can free up more cash to invest back into a business. 

A ‘good DSO’ depends on the industry you’re in and how much liquidity you need, but most companies generally aim for less than 45 days.  A DSO under 30 days is considered excellent, indicating that clients pay promptly and sales are quickly converted into cash. 

Why a pivot towards data is a smart way to manage risk

Many businesses rely on trade credit insurance to protect against late or non-payment risks, but it does have its limitations. Premiums can be high – particularly for firms with a large volume of transactions or those operating in high-risk industries. It’s also likely to exclude certain risks or set a cap on credit limits due to the insurers existing risk exposure. 

As an alternative – or complementary – resource to insurance, data can be a powerful weapon in your risk armoury. 

At Dun & Bradstreet, our layered data services can give you a better understanding of customers’ risk profile to inform your decision-making.

Don’t just take it from us…>

Find out how automated risk management processes enabled Alba's M&A driven growth spurt.

5 data-driven strategies to reduce DSO

Want to take control of unpaid credit? Here are five ways D&B business support solutions could help you reduce DSO and improve cash flow.

1. Streamline customer billing

Payment hold-ups can occur if customer invoice addresses aren’t correct, or payment terms and due dates aren’t clear. Focus on improving customer data quality by capturing changes dynamically as they occur to prevent billing errors and disputes, which can contribute to a high DSO. 

2. Segment customers for prioritised collections 

By analysing data, you can segment your customer base into groups based on payment history, account size and risk profile. Using our Unified Risk View (URV) allows you to implement more efficient collections strategies tailored to each segment and easily identify and prioritise high-risk accounts. 

 3. Improve credit evaluations

For large projects or new clients, verification and risk assessment at the point of origination is essential to help mitigate future DSO issues. Before committing significant resources, monitor the creditworthiness of customers using D&B’s proprietary multi-source data and scores, as well as advanced analytic capabilities. 

4. Get instant credit risk alerts

The more companies you have in your credit portfolio, the harder it is to keep a close eye on them all. Predictive alerts allow you to monitor real-time risk so you can act early on deteriorating accounts proactively. 

5. Benchmark DSO performance 

Having access to industry and peer payment data allows you to benchmark your DSO performance against your competitors. If you find that it’s taking you longer to collect payments than your counterparts, look at best practices and set goals to improve your own processes. 

Making self-insurance a viable option

A strong understanding of company risk profiles, backed by reliable data, arms you with the tools and confidence you need to take on more credit management responsibility yourself. 

One of the biggest benefits of data mining is the ability to conduct detailed retrospective DSO analysis. By examining customer trends and payment patterns over time, it’s possible to identify the root causes of DSO fluctuations and apply more efficient onboarding and collections strategies.

While data-driven initiatives don’t fully eliminate the need for trade credit insurance, they can empower you to implement better self-insurance strategies and save on premiums. 

Are you considering strategies to reduce DSO within your business, or reviewing your use of trade credit insurance? Get in touch with Albi today and he will find a convenient time to connect.

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