Late collection of outstanding payments is why your accounts receivable stay high and your DSO remains longer. A longer DSO means your cash (liquidity) is tied up in receivables, effectively locking up your working capital.

According to a 2024 JP Morgan report, about $707 billion is stuck in working capital because 63% of surveyed companies are seeing an increase in DSO. According to the same report, the average DSO, across industries, was 51 days in 2023, up from 47 days in 2021.

But how costly is just a one-day increase in DSO?

This cost depends upon your Net Credit Sales (NCS).

For the sake of the calculation, since this info is not disclosed in the financial reports, we will take this variable equal to the annual revenue.

Consider this scenario:

For a company with annual credit sales of $3.4 billion and a Weighted Average Cost of Capital (WACC) of 6%, a single day increase in DSO equates to an additional $0.56 million in cash tied up.

Reducing DSO by merely 6 days can therefore free approximately $3.36 million in working capital.

Real-world examples reinforce this point vividly:

• DXP, a Fortune 500 firm, reduced its DSO by 20 days, resulting in $20 million additional cash flow and a 40% improvement in working capital. For DXP, each day of DSO improvement directly translated into about $1 million in additional cash.
• Similarly, Konica Minolta automated its receivables processes using AI Agents, cutting DSO by 9 days. This initiative significantly enhanced their liquidity, enabling them to unlock millions in working capital and realize $3.5 million in savings from payment processing efficiencies.

These examples underscore how liquidity can be trapped within receivables. Accelerating customer payments directly enhances cash inflow, providing businesses the flexibility to reduce debt, invest strategically, and optimize overall financial performance.

Leveraging a suite of AI Agents can further streamline receivables, boosting productivity, accelerating collections, and significantly improving operational metrics.

Lower DSO Shows Higher Collector Productivity

DSO improvements go hand in hand with process changes (automation, analytics, better credit controls). These improvements boost the productivity of collections teams. This means handling more accounts per collector at a lower cost.

APQC benchmarking finds that organizations at the 25th percentile need 2.5 FTEs to process AR per $1 billion revenue, while organizations at the 75th percentile need more than twice as many FTEs to do the same amount of work.

By adopting best practices (e.g., auto-reminders, segmented collection strategies, and real-time dashboards), Fortune 500 shared service centers have achieved 30–40% productivity improvements in the collections department.

A notable example of this is Red Bull, which saw a 43% increase in collectors’ productivity after deploying an AI-driven receivables platform. This resulted in $6.2M in added working capital and a 22% improvement in past due coverage.

Lower DSO is Your Ticket to the “Fast Close” Club

A study by APQC highlights the impact: top performers close monthly books in about 4.8 days, whereas the bottom quartile takes 10 days or more.

Firms with streamlined processes (often leveraging automation in AR, AP, and reconciliations) consistently achieve much faster closes:

When AR data is up-to-date and accurate, finance teams face fewer delays or adjustments during close. Efficient receivables management shortens the financial close cycle because recording and reconciling accounts receivable is a critical early step in closing the books each period.

Posting all customer payments is step #1 of the month-end close process

Improving AR can contribute to joining the “fast close” club.

Rebill Recovery Rate and Dispute Resolution

High DSO often correlates with poor invoice quality or lax dispute resolution, which can lead to revenue leakage (unpaid amounts that are written off or never rebilled).

Strengthening receivables processes improves this recovery.

A compelling case study comes from Danone North America (the dairy and food giant’s NA division). By implementing an AI-driven deductions management system, Danone was able to automate cash applications and quickly resolve invalid deductions taken by customers.

As a result, the company now recovers $20 million annually in invalid deductions that would have otherwise been lost revenue. Moreover, with these tools, Danone achieved straight-through (touchless) cash posting and 96% cash forecasting accuracy, indicating a highly controlled AR process.

Conclusion

Across Fortune 500 organizations, tightening the order-to-cash cycle through DSO reduction and modern receivables management yields tangible improvements in financial performance.

Working capital is liberated as receivables are converted to cash faster, operating cash flow gets a timely boost, and liquidity improves. Meanwhile, process optimization drives collector productivity higher and can shorten the financial close, allowing for more agile reporting.

Finally, focusing on invoice accuracy and disputes elevates the rebill recovery rate, capturing revenue that might otherwise slip through the cracks.

The evidence — from consulting benchmarks to real-world case studies — consistently shows that effective AR management is a critical component of financial excellence.

By benchmarking DSO and related metrics, and learning from peers’ successes (e.g., the examples of DXP, Konica Minolta, Danone, Alcoa, and others), companies can identify substantial opportunities to unlock cash and value from their receivables.