DSO Benchmarks for Australian B2B Businesses: What Is Good and What Is a Warning Sign

# DSO Benchmarks for Australian B2B Businesses: What Is Good and What Is a Warning Sign

Days Sales Outstanding (DSO) is the single most widely used measure of AR performance. It tells you how many days, on average, it takes to collect payment after an invoice is raised. But what does a good number actually look like for an Australian B2B business?

The Baseline Formula

DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days in Period

A business with $500,000 in AR and $2 million in quarterly credit sales has a DSO of 22.5 days. A business with $1.2 million in AR over the same revenue has a DSO of 54 days.

Australian B2B Benchmarks by Industry

DSO varies significantly by industry, payment terms, and customer size:

• **FMCG / Food distribution:** 35–45 days (standard 30-day terms, relatively disciplined payers)
• **Construction and trade:** 55–75 days (retentions and disputed variations extend collections significantly)
• **Professional services:** 30–45 days (shorter engagement cycles, but disputes common)
• **Wholesale distribution:** 40–55 days
• **Manufacturing:** 45–60 days

If your DSO is running more than 15 days above the benchmark for your industry, you have a systemic collections problem rather than a temporary one.

What Pushes DSO Up

The most common DSO drivers are process failures, not customer refusals to pay:

• Invoices sent to the wrong contact or with incorrect information
• No systematic follow-up until accounts are significantly overdue
• Disputes sitting unresolved for weeks
• No separation between high-priority and low-priority collections activity
• Payment terms inconsistently applied or poorly communicated

What Actually Brings DSO Down

Businesses that consistently achieve below-benchmark DSO share three characteristics: they invoice immediately, they follow up systematically from day one of an overdue account rather than waiting 30 or 60 days, and they have visibility across their entire ledger rather than managing by exception.

Automated AR platforms typically reduce DSO by 20–35% within the first six months — not by making customers pay faster, but by removing the process failures that allow accounts to age unnecessarily.