How to reduce DSO: 9 practical ways to get paid faster

Days sales outstanding (DSO) is the clearest measure of how quickly you turn invoices into cash. A high DSO means money you've already earned is stuck in other people's bank accounts. Here are nine practical ways to bring it down.

What is DSO?

DSO is the average number of days it takes to get paid after raising an invoice. The simple formula is:

For many UK SMEs DSO sits around 50–60 days, well beyond typical 30-day terms. Every day you cut frees up working capital you can use elsewhere.

1. Invoice promptly and accurately

The clock only starts when the invoice goes out — and a wrong invoice resets it. Send invoices the moment work is done, with correct amounts, PO numbers and clear payment details.

2. Set clear, short payment terms

State terms on every invoice and in your contract. Shorter terms (e.g. 14 days) and explicit due dates anchor expectations and give you grounds to chase sooner.

3. Remind customers before the due date

A friendly nudge a few days before an invoice falls due prevents it from quietly slipping. Pre-due reminders consistently improve on-time payment.

4. Automate your chasing

Manual chasing is slow and easy to drop when you're busy. Automated, escalating reminders — sent from your own domain and matched to each customer — keep collections moving without eating your week. (More on this in our guide to automating invoice chasing in Xero.)

5. Make it effortless to pay

Every extra step costs you days. Add a one-click "pay now" link to every reminder so customers can pay by card or bank in seconds, rather than digging out your bank details.

6. Handle disputes and queries fast

A single unanswered "we dispute this line" can freeze an invoice for weeks. Triage replies quickly, resolve queries, and log promises to pay so nothing stalls.

7. Offer and track payment plans

For larger or struggling accounts, a structured instalment plan recovers cash that might otherwise become bad debt — as long as you track each instalment and chase misses automatically.

8. Credit-check new customers and set limits

Prevention beats collection. Score customers on payment behaviour and public company data, set sensible credit limits, and watch for warning signs like overdue accounts or a change in company status.

9. Use your right to statutory interest

UK businesses can charge statutory interest (Bank of England base rate + 8%) plus a fixed recovery sum on late commercial invoices. Even mentioning it focuses minds.

Putting it on autopilot

Most of these come down to consistency — which is exactly where automation helps. in2 collect connects to your Xero or Sage ledger and runs the whole loop: AI chasing, a reply & dispute inbox, one-click pay links, statutory-interest letters and built-in credit scoring — so your DSO falls without the manual grind.