Glossary · Receivables metrics
Best Possible DSO (BPDSO)
Best Possible DSO is the DSO you would have if every customer paid exactly on terms. It counts only receivables that aren’t yet overdue.
Best Possible DSO (BPDSO) strips lateness out of days sales outstanding. It counts only current receivables — invoices not yet due — so it shows how long your terms alone make you wait for cash.
On its own, BPDSO tells you about your terms; next to DSO it tells you about collections. The gap between the two is average days delinquent: the part of your DSO caused by customers paying late, which is the part better follow-up can remove.
If BPDSO itself is high, the problem isn’t chasing. It is the terms you agreed, or how long you take to invoice after the work is done.
Formula
BPDSO = (current receivables ÷ credit sales in the period) × days in the period
Example
Over 90 days a firm makes €270,000 of credit sales. Receivables are €90,000, of which €60,000 is not yet due. BPDSO = 60,000 ÷ 270,000 × 90 = 20 days. DSO = 90,000 ÷ 270,000 × 90 = 30 days, so late payment adds 10 days.