Calculate financing costs

DSO (Days Sales Outstanding) is one of the most important measures of a company's cash flow. It tells you, in days, how long it takes on average from sending an invoice to receiving payment. In Finland, the average DSO for companies is approximately 24--27 days, which is a good level internationally -- the European average is around 40 days.

The importance of DSO is especially pronounced in SMEs, where cash flow is a lifeline for the business. According to Intrum Justitia's European Payment Report, 33% of Finnish companies have had to delay their own payments because customers pay slowly. A high DSO means that money is tied up in accounts receivable instead of being available for investments, salaries, or supplier payments.

Our DSO calculator helps you measure your company's actual days sales outstanding and compare it to your industry average. You can see immediately whether your DSO is at a healthy level or whether action is needed. The calculator also shows how much cash would be freed up if you managed to reduce your DSO by a few days.

A practical example: if your company's annual revenue is EUR 500,000 and DSO is 40 days, approximately EUR 54,800 is tied up in accounts receivable. If you manage to reduce DSO to 30 days, EUR 13,700 is freed up into the treasury -- without additional sales or external financing. With annual revenue of one million euros, the same improvement frees up EUR 27,400.

Monitoring DSO is especially important for growing companies. When sales grow but DSO remains the same or increases, more and more capital is tied up in accounts receivable. This is the classic 'cash flow trap' for growth companies -- the business is profitable, but the money is stuck in invoices. According to the Federation of Finnish Enterprises, this is the most common reason why a growing SME needs external financing.

Finland is among the leading countries in Europe for payment discipline. According to the European Payment Practices survey, the average payment time for Finnish companies is approximately 24 days, compared to 80--100 days in Southern Europe. Despite this, late payments are a growing problem in Finland as well -- approximately 40% of business invoices are paid after the agreed due date.

Industry-specific differences are significant. In retail and e-commerce, DSO is typically below 10 days thanks to cash sales. In IT consulting and professional services, DSO is 25--40 days. In construction and manufacturing, DSO often rises to 40--60 days due to long payment terms and project-based invoicing. For public sector suppliers, DSO can be 35--50 days due to bureaucracy.

There are several practical strategies for reducing DSO. The first and most effective is speeding up invoicing -- invoice as soon as the work is done or goods are delivered, don't wait until the end of the month. Research shows that simply accelerating invoicing can reduce DSO by 3--7 days. The second strategy is offering cash discounts: for example, '2/10 net 30' means a 2% discount if the customer pays within 10 days.

The third strategy is automating the collection process. Automatic payment reminders 3 days before the due date, on the due date, and 3 days after can significantly improve payment speed. The fourth approach is invoice financing, which effectively reduces DSO to one day -- you receive payment immediately after sending the invoice from the financier, and the customer's payment time no longer affects your cash flow.

The impact of DSO on company valuation and creditworthiness is significant. Banks and investors monitor DSO as part of a company's financial health. A high or rising DSO can lead to a downgraded credit rating and tighter financing terms. In the decision-making of Finnvera and other public financiers, a company's working capital management -- of which DSO is a key indicator -- carries significant weight.