Glossary
Average payment time
Average payment time is the average number of days between sending an invoice and the client paying it.
Explanation
It is also called DSO, for Days Sales Outstanding. It is the number that sums up how you get paid: the higher it is, the longer your money sleeps at your clients’. Compare it with the terms written in your contracts: the gap between the two is your average delay.
A simple method for an SME: divide the total of unpaid invoices by the revenue invoiced over the period, then multiply by the number of days in the period.
Example
Fictional example. A company invoices 30,000,000 FCFA over the last 90 days. On the last day, 20,000,000 FCFA of invoices are still unpaid. Its average payment time is 20,000,000 ÷ 30,000,000 × 90 = 60 days. If its contracts say 30 days, its clients pay on average 30 days late.
This is the number measured at the start of the engagement, then every month.