Kolleno Payments
If your days sales outstanding (DSO) is creeping up, you feel it before you see it in a report. Cash gets stuck in accounts receivable, new projects slow down, and your finance team spends more time chasing unpaid invoices than supporting growth. High days sales outstanding DSO quietly erodes your company’s cash flow and raises the risk of bad debt.
The usual response is to hire. Another credit controller. Another collections specialist. But if your accounts receivable process and payment process are broken, extra headcount just papers over the cracks.
You don’t need a bigger team to reduce DSO. You need a cleaner process, better incentives for early payments, and smarter automation. The five tactics below focus on the parts of your accounts receivable workflow that move the needle on days sales—without adding more AR staff.
1. Fix the basics: tighten your invoicing process and payment terms
If the basics are off, everything else in your accounts receivable process has to work twice as hard. A slow, inconsistent invoicing process is one of the most common reasons for high DSO. If invoices go out late, include the wrong payment terms, or miss key details, you’ve built delay into your cash flow from day one.
Start with speed and accuracy. Make sending invoices part of the delivery workflow, not an afterthought at month-end. As soon as work is complete or a milestone is hit, the invoice should go out automatically. Standardise your templates so every invoice includes a clear due date, correct bank details, PO or reference numbers, and a short description the customer will recognise. Removing rework here can shave days off your average DSO.
Next, look hard at your payment terms. If you offer the same terms to every customer, regardless of risk or size, you’re probably extending free credit where you shouldn’t. Shorten terms where you can. Use upfront payments or staged billing for new or higher-risk customers. For strategic accounts, agree terms explicitly and document them, rather than letting sales teams improvise. Clear, agreed credit terms and visible due dates support prompt payments and a more healthy cash flow.
Finally, automate as much as possible. Use your billing or AR platform to trigger invoices from events in your CRM or ERP and to apply consistent rules. That reduces errors, cuts manual processes, and frees your team from admin so they can focus on exceptions, not routine sending invoices.
Get the basics right and you shorten the distance between work delivered and cash collected—before you even touch your collections strategy.
2. Make it effortless to pay
Sometimes the problem isn’t willingness to pay. It’s that your payment process gets in the way. If customers have to hunt for bank details, print PDFs, chase approvals, and manually key payments into their own systems, late payments are almost guaranteed.
Make it easy to do the right thing. Offer multiple payment options that match your customers’ internal workflows. That might mean card, bank transfer, direct debit, or digital wallets. Let customers choose their preferred payment methods up front, and build those into your standard payment terms. The less friction there is, the more timely payments you’ll see.
Then remove unnecessary steps. Use payment links on every invoice and reminder so customers can pay in a couple of clicks. Bring everything together in payment portals or customer portals where they can see outstanding invoices, check due dates, download statements, and resolve small queries without emailing your team. A simple payment gateway behind the scenes can handle the heavy lifting here.
Tools like Kolleno make this practical. You can add a payment link to every message, give customers multiple payment options, and let them self-serve through a branded portal. That reduces back-and-forth, improves customer satisfaction, and supports a more steady cash flow without extra hands on deck.
If paying you feels easy and familiar, customers will pay you faster.
3. Automate the accounts receivable process and reminders
Most AR teams don’t struggle because they’re lazy. They struggle because the accounts receivable process is built on spreadsheets, calendar reminders, and ad hoc emails. Chasing outstanding invoices, logging calls, and updating notes are all classic time consuming tasks. They don’t scale.
Start by mapping the full AR cycle. From sending invoices to final collection, define when you expect due dates, when you send automated payment reminders, and when an invoice moves from “nudge” to “late payment”. Standardise that collections process so every customer gets a consistent experience and nothing depends on who happens to be in the office.
Then let software run it. Modern AR tools can send automated payment reminders before and after the due date, escalate late payments based on rules, and route tricky cases to your collections team. They track dso metrics, average days delinquent, and even a collection effectiveness index, giving you data driven insights into what’s working. That’s how you achieve meaningful dso reduction and keep high DSO from creeping back.
Kolleno is built around this idea. It automates reminder flows across email, SMS, and phone tasks, prioritises the riskiest accounts, and gives collections teams a single workspace instead of scattered inboxes. You get better collections efforts and higher on time payment rates—without hiring another person to send chase emails.
When automation takes care of routine follow-up, your team can focus on the conversations that actually move cash.
4. Use smarter credit policies and customer segmentation
You can’t fix days sales outstanding if you give credit to the wrong customers on the wrong terms. Loose credit policies lead straight to high DSO, more bad debt, and constant firefighting.
Start with how you’re extending credit. Tighten your credit policy so new customers complete clear credit applications and you actually use the information you collect. That might mean checking credit scores, reviewing trading history where possible, and looking at payment history for existing accounts. Use that to set sensible credit limits / credit limit and, where needed, capped credit lines rather than open-ended exposure.
Next, stop treating every buyer the same. Segment customers by risk, size, and behaviour. Low-risk, long-standing customers with a strong track record of on time payment can get more generous credit terms. New, smaller, or high risk accounts might need deposits, upfront payments, or shorter payment terms. You can also use varying payment terms within a group: for example, standard terms plus stricter rules if previous invoices slipped past the due date.
This is where the right tooling helps. Kolleno’s credit and risk features combine internal payment history and external credit data, surface risky accounts, and help your collections team focus on the customers most likely to push due dates and increase days sales outstanding DSO. That protects customer relationships with your best payers, while keeping tighter control where it matters.
Smarter credit decisions reduce DSO at the source, before an invoice ever goes overdue.
5. Fix cash application and give finance real-time visibility
Even if you speed up payments, you still need to recognise cash quickly. Slow, manual cash application inflates reported days sales, hides problems in your accounts receivable process, and makes your cash management process guesswork.
In many teams, matching incoming payments to unpaid invoices and outstanding invoices still involves spreadsheets and detective work. References don’t match. Remittances arrive late. People re-key data between accounts receivable and accounts payable systems. These manual processes waste time and delay your view of cash flow.
Automated cash application changes that. Modern tools match payments to invoices based on references, amounts, and customer behavior patterns. When something doesn’t align, they flag it as an exception so your team can resolve exceptions quickly instead of checking every line. As a result, the average number of unmatched items falls, your reported days sales outstanding DSO reflects reality faster, and your cash management improves.
Kolleno goes further by combining AR automation with AI-assisted cash application. Payments are automatically reconciled and matched to invoices in near real time, exceptions are highlighted in a single view, and finance can see the impact on working capital, financial health, and overall company’s cash flow at a glance.
When you close the loop between cash hitting the bank and invoices being cleared, you don’t just reduce DSO on paper—you make that cash available to the business sooner.
Final thoughts
You don’t fix days sales outstanding by throwing more people at it. You fix it by tightening the basics, removing friction from payments, automating the accounts receivable process, making smarter credit decisions, and cleaning up cash application. Do that well and you reduce DSO, strengthen customer relationships, and protect a healthier cash flow—with the team you already have.
Kolleno brings those levers together in one platform. It streamlines invoicing and reminders, gives customers easy payment options, automates collections workflows, supports better credit decisions, and matches payments to invoices in near real time. That makes it one of the most direct ways to lower days sales outstanding DSO and improve financial health without hiring more AR staff.If you want to see what that looks like in practice, book a demo with Kolleno today.
