DSO (Days Sales Outstanding) is the average number of days between recording a sale as revenue and the cash landing in the brand’s bank account.
365 for annual, 90 for trailing quarter, 30 for monthly
For a DTC brand the number is small, but rarely zero.
DSO is the receivables leg of the cash conversion cycle: CCC = DIO + DSO - DPO. Every day of DSO extends CCC one-for-one against the offsetting DPO — cash funded from equity, working capital, or supplier float.
For a pure-DTC brand on a hosted card checkout, the receivable is mostly the pending-payout balance — funds the processor has captured but not yet wired through. That usually clears in a few business days; the cadence depends on the payout schedule and any rolling reserves the processor applies to newer merchants. Open return windows and pending refunds also sit in receivables and lift DSO in high-return categories like apparel.
Wholesale and marketplace receivables change the picture. Those invoices carry net terms — DTC wholesale books commonly land somewhere in the net-30 to net-90 range, depending on what each buyer negotiated. Once those channels are material, blended DSO climbs sharply, and the operator pitfall is reading the headline without splitting by channel. As an illustration, take a 100%-DTC brand with a 3-day payout balance: blended DSO sits around 3 days. Add a wholesale channel on net-45 terms growing to 10% of revenue, and the revenue-weighted blended DSO walks to roughly 7. Let wholesale reach 30% and it climbs to roughly 16 — mix moving, terms unchanged. Split DSO by channel before reading a rising blended number as a collections problem.