The Scale of the Problem
The numbers are clear—and costly. J.P. Morgan’s 2024 Working Capital Index shows S&P 1500 companies holding more than $707 billion in trapped liquidity, with 67% of firms reporting higher DSO over the past year. For the first time in a decade, The Hackett Group found all major cash conversion metrics worsening at once: DSO up 3% to 40.1 days, DIO edging higher, and DPO declining.
At the same time, industry reports warn that companies failing to modernize their receivables management are exposing themselves to greater credit risk. With nearly 70% of businesses now reporting DSO above 46 days—well beyond standard credit terms—the gap between best practice and reality is widening fast.
The global trend is unmistakable: with peers upgrading their approaches, companies that delay action are falling further behind. Today, nearly 70% of businesses report DSO above 46 days—well beyond standard credit terms.
Across industries, the gap between benchmark and reality is widening:
- Manufacturing: Best practice is 30 days, yet many firms operate closer to 50.
- Retail: Thin margins make even modest DSO increases destabilizing.
- Services & Healthcare: DSO routinely exceeds 50 days.
- Construction: Terms often stretch past 60, compounding delays.
The longer receivables remain outstanding, the more liquidity shrinks—limiting flexibility just when finance leaders need it most.
The Hidden Costs of High DSO
Rising DSO isn’t only a balance sheet problem—it disrupts operations and customer relationships. Three impacts stand out:
- Reliance on borrowing – trapped cash forces reliance on credit lines and loans, raising costs and credit exposure.
- Hidden operating costs – finance teams spend hours reconciling aging accounts instead of planning, sales teams chase invoices instead of deals, and service staff get pulled into disputes.
- Strained customer relationships – overdue balances shift conversations from growth to collections, eroding trust and leverage.
A Proven Fix
The good news: these problems can be addressed quickly, without a costly system overhaul. The CashConvert+™ program applies a five-move approach to turn order-to-cash delays into measurable gains in liquidity:
- Measure precisely and de-average DSO
- Focus on the critical few accounts driving the majority of delays
- Create shared accountability across finance, sales, and service
- Enable visibility with BI dashboards at the invoice level
- Equip teams with KPIs, escalation paths, and automation to sustain gains
The impact is proven. In one 45-day engagement, a client recovered $6M in overdue receivables, reconciled $5M in aged credits, and reduced $12M in working capital—all without replacing existing systems.
