DSO

DSO (Days Sales Outstanding) is the metric that measures the average number of days a company takes to collect its receivables after invoicing. It is the primary indicator of payment speed in a market.

How it works #

It is calculated as: (Trade Receivables / Revenue) × Days in Period. A DSO of 30 means clients pay within a month on average. In Italy the average DSO is 80 days according to the European Payment Report — nearly three times the northern European average (24-27 days).

What it’s for #

For a freelance consultant, DSO determines working capital needs. With a 90-day DSO and €5,500/month revenue, at least €16,500 in reserves are needed to cover the first three months without income. Without reserves, the consultant is financing their client at zero cost.

Why it matters #

Italy is off the scale relative to the EU Directive that sets the maximum term at 60 days. An 80-day DSO is not just a financial problem — it is a structural indicator of a market where bargaining power is tilted in favor of the client.