By KYN AI Advisory Team — AI implementation specialists, Singapore
Days to collect invoices, usually called days sales outstanding (DSO), is the average number of days between issuing an invoice and receiving payment. Calculate it from your own ledger, by customer and by industry, because an industry average from another company's books will not tell you who owes you money. This article gives two formulas, a method for slicing the data and a chase schedule. It does not quote a regional average, because we have no measured figure to cite.
What are the two ways to calculate it?
Balance method. Take total receivables at period end, divide by credit sales in the period, and multiply by the days in the period.
DSO = (receivables at end ÷ credit sales in period) × days in period
Example with invented round numbers: receivables of 300, credit sales of 900 over a 90-day period. 300 ÷ 900 × 90 gives a DSO of 30.
Paid-invoice method. For each invoice paid in the period, count the days from invoice date to payment date, then average them, weighted by invoice value if you want a money view.
Days to pay = payment date minus invoice date
The balance method is quick and sits on the balance sheet. It is distorted by growth: a month of strong sales inflates receivables and the figure. The paid-invoice method describes real behaviour of invoices that have closed, but it ignores the ones still open, which are often the slowest. Use both. Report the balance figure for the board and the paid-invoice figure for chasing.
Why slice by customer and industry?
An average hides the cause. A company with a middling DSO may have thirty customers who pay near terms and three who pay months late. The fix for the three is a conversation, not a policy change for everyone.
Slice in four ways:
- By customer. Who pays late, how late, and how consistently.
- By industry. Group customers by sector using a tag on the customer record. Sectors differ in approval chains and payment cycles. Compare your own groups with each other, not with a published average.
- By invoice size. Large invoices often need more sign-offs.
- By country. For firms in Singapore, Hong Kong, Indonesia and Malaysia, banking days and approval habits differ.
Each slice needs a clean customer record. If the same client appears under three spellings, the slice is wrong. Fix the customer master first.
What data do you need?
Five fields per invoice, from your accounting package:
- customer ID, not name;
- invoice date;
- due date and terms;
- amount and currency;
- payment date, or blank if open.
Add two tags to the customer: industry and country. Export for the last 12 months. In Xero this is a report export; in other packages it is a ledger query. If you run payments through bank reconciliation, make sure payments are matched to invoices; unmatched receipts make an invoice look open when it has been paid. See our guide to automating bank reconciliation in Singapore.
How do you read the results?
Build one table and read three columns.
| Customer | Terms | Average days to pay | Days past terms | Open balance | |---|---|---|---|---| | from ledger | per contract | computed | computed | computed |
- Days past terms is average days to pay minus the terms. It matters more than the raw average: a customer who pays before the due date is on time.
- Spread is the gap between the fastest and slowest invoice. A wide spread means the customer is not consistently slow. Something specific delayed some invoices: a missing PO number, a wrong entity, a dispute.
- Trend is the change over three months. A customer whose days to pay climb each month is a signal before the invoice becomes overdue.
Rank customers by open balance times days past terms. That puts attention where the cash is.
What chase schedule works?
A chase should be automatic, polite and tied to the due date. KYN's own books chase receivables at 3, 14 and 30 days:
- Third day. A reminder, with the invoice attached and the payment details. Often the invoice was never seen.
- Day 14. A second message asking for a payment date.
- Day 30. A message to a named senior contact, and a call from a person.
Adjust the day counts to your terms. Count from the due date or from the invoice date, but pick one and say which in the message.
An agent can draft each message from the invoice record, choose the contact and queue it. A named person approves before it is sent, because the message carries your name and your customer relationship. Sending waits for that person. Our article on automated customer follow-up for Singapore SMEs covers the mechanics.
What causes slow payment that chasing does not fix?
- Wrong recipient. The invoice goes to the buyer, who is not accounts payable.
- Missing reference. No PO number, so it is rejected at intake.
- Invoice errors. Wrong amount, wrong entity, wrong date.
- Long approval chains. The customer needs three sign-offs.
- Disputes. A delivery issue holds the whole invoice.
Record the reason when a customer replies. After a quarter, the reasons tell you which fix removes the most days: invoice at the point of delivery, send to the right contact, add the reference field at quotation, or settle disputes faster.
How do you improve DSO without annoying customers?
- Invoice on time. A delay of five days in issuing is five days added to DSO.
- Send to the accounts payable contact with the reference they need.
- Agree terms in the quotation and show them on the invoice.
- Offer payment methods the customer already uses.
- Chase on schedule, not when cash is tight.
- Review the slow payers every month and decide: accept, change terms, or stop credit.
Where KYN fits
KYN builds finance systems where bills, invoices and payments sit in one ledger, with a chase schedule on receivables. For our own books, bills arrive from Gmail and receivables are chased at 3, 14 and 30 days. DSO by customer and industry becomes a query on the ledger, not a spreadsheet exercise. A named person approves each outbound chase, every action is logged against the actor, and the system runs in a cloud account in your name.
The first 14 days are a review of your accounting stack and receivables process. A full build ships in under 90 days. See finance and the related guide to AI follow-up for insurance brokerages.
Frequently asked questions
What is a good DSO?
It depends on your terms. Compare average days to pay with the terms you grant. A DSO close to your terms is healthy. A DSO well above terms points to chasing, invoice quality or credit decisions.
Should I use the balance method or the paid-invoice method?
Use both. The balance method is quick and fits the balance sheet. The paid-invoice method shows real customer behaviour and works for chasing.
Can an agent chase invoices without approval?
It can draft and queue. A named person approves each message before it goes, because it carries your name and affects the customer relationship.
Checked 30 October 2026.
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