Days Sales Outstanding represents the number of days it takes to collect payment for services rendered. Typically, businesses that provide a service have a DSO of 30. This means that on average, they collect payments within 30 days.
Generally, it takes an agency 45-60 days to collect patient revenue from a payer. And, with complex payment models and changing regulations, it’s becoming more and more difficult to collect in a timely manner. It’s incredibly important for an agency that has lean cash flow to stay on top of DSO. A slight increase makes it harder to pay vendors and creditors on time. In addition, a high DSO can limit reinvestment in patient care, growth, and expansion.
Use the below Days Sales Outstanding Calculator to see how achieving a target of 45 days, or even 30 days, could impact your cash flow.