Days Sales Outstanding (DSO) in Australia 2025: What You Need to Know

Days Sales Outstanding (DSO) has always been a critical gauge of business health, but in 2025, it’s more important than ever for Australian businesses of all sizes. With economic headwinds and evolving payment practices, understanding DSO could mean the difference between robust growth and cash flow headaches.

What Is DSO and Why Does It Matter in 2025?

DSO measures the average number of days it takes a company to collect payment after making a sale. The lower the DSO, the faster a business is turning its sales into cash. High DSO can signal trouble—a warning that receivables are piling up and cash flow is under pressure.

In 2025, several factors are shaking up the DSO landscape for Australian businesses:

• Rising interest rates are making cash flow management more crucial as the cost of borrowing increases.

• Changes in payment regulation: The Australian Treasury’s new 2025 Payment Times Reporting reforms require large companies to pay small business invoices within 30 days, with increased transparency and penalties for late payments.

• Digital invoicing adoption is accelerating, streamlining accounts receivable but also raising customer expectations for flexible payment methods.

For example, a Sydney-based construction supplier reported that tightening their DSO from 53 to 35 days in 2024 gave them the liquidity to secure better supplier discounts, directly boosting margins.

How to Calculate and Benchmark DSO in Australia

Calculating DSO is straightforward:

DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days in Period But what’s a ‘good’ DSO? It varies by industry. According to 2025 data from the Australian Small Business and Family Enterprise Ombudsman:

• Retailers: 20–30 days

• Wholesale/Manufacturing: 30–45 days

• Construction: 40–60 days

Compare your DSO against industry benchmarks and your own historical trends. A sudden spike could flag issues with customer creditworthiness, internal processes, or external market shocks.

Strategies to Improve DSO and Future-Proof Your Cash Flow

With the 2025 Payment Times reforms and economic volatility, proactive DSO management is non-negotiable. Here’s what leading Australian businesses are doing now:

• Automating invoicing and reminders: Cloud accounting platforms like Xero and MYOB now integrate real-time payment tracking and automated chasers.

• Incentivising early payments: Offering small discounts for payments within 7–14 days is gaining traction, especially in the B2B space.

• Strict credit policies: In 2025, businesses are tightening credit checks and setting clearer payment terms upfront.

• Leveraging supply chain finance: Some larger companies are using third-party platforms to pay suppliers promptly, even if their own DSO remains longer.

• Monitoring customer risk: With insolvencies on the rise in 2025, regularly reviewing customer credit profiles is critical.

Case in point: A Melbourne tech distributor reduced its DSO by 12 days in Q1 2025 by integrating e-invoicing and partnering with a fintech to offer flexible payment options to clients, resulting in smoother cash flow and improved supplier relationships.

What’s Next: The DSO Outlook for Australian Businesses

With regulators cracking down on late payments and digital tools making collections more efficient, DSO is set to become a key performance indicator not just for finance teams, but for entire organisations. Staying on top of your DSO isn’t just about compliance—it’s about unlocking growth, resilience, and competitive advantage in a fast-moving 2025 economy.