What's a good DSO for a SaaS company?

For growth-stage B2B SaaS, a DSO of 30-45 days is healthy. Top-quartile performers hit under 30 days, often through a combination of annual prepayment contracts and automated collections. SMB-focused SaaS companies typically achieve 25-35 days; enterprise-focused companies with Net 45-60 contract terms will run higher. The most important benchmark is whether your DSO is trending toward or away from your payment terms — a DSO more than 15 days above your stated terms signals a process problem worth fixing immediately.

How do we negotiate longer payment terms with vendors?

The most effective approach is to frame the negotiation as a predictability offer rather than a cash preservation request. Tell the vendor: 'We will commit to paying every invoice by Day 45, without exception, in exchange for extending our terms to Net 45.' On-time reliability is often more valuable to vendors than speed. Build this into vendor onboarding conversations — it is far easier to set Net 45 as the starting point for a new vendor than to renegotiate Net 30 terms that have been in place for two years.

When should we automate AR collections?

The threshold is lower than most companies expect. Once you have more than 20-30 active B2B invoices outstanding at any time, manual follow-up will miss the coverage needed for a consistent dunning process. Bill.com, Stripe, Chargify, and NetSuite all offer automated collections workflows that can be configured in days. The ROI is fast: AR automation typically reduces DSO by 8-15 days within 90 days of deployment, according to IOFM benchmarking data — and 91% of mid-sized firms with fully automated AR report increased savings and cash flow.

How does AR aging affect our ability to borrow against receivables?

Lenders use an AR aging report to calculate your eligible borrowing base — the amount of AR they will lend against. Standard eligibility rules exclude receivables older than 90 days, receivables from any customer exceeding 20-25% of total AR, and invoices with unresolved disputes. A company with $5M in gross AR but $1.5M past 90 days and $1M in a single concentrated customer may have only $2.5M in eligible AR — 50% of the headline number. Cleaning up the aging schedule before lender diligence is the single most impactful preparatory action for companies pursuing asset-based lending or venture debt.

Should we factor receivables to accelerate cash?

Factoring (selling receivables to a third-party factor at a discount) can be a useful tool in specific situations — rapid growth outpacing collections capacity, seasonal cash needs, or bridge financing. However, the cost is real: factoring fees typically run 1-5% of invoice value per 30-day period, which can equate to 12-60% annualized. Before factoring, evaluate whether improved collections process and dunning sequences can close the gap at zero marginal cost. If you do factor, recourse vs. non-recourse structure matters — we recommend discussing the trade-offs with your CFO advisory team before committing to any factoring facility. Ready to Build a Best-in-Class AR/AP Operation? We work with growth-stage CFOs and Controllers to design and implement the financial operations infrastructure that drives working capital performance — and positions companies for debt raises with cleaner borrowing bases. → Explore CFO Services | → Financial Operations

AR and AP Processes That Improve Financial Visibility (and Free Up Cash)

AR and AP processes that sharpen financial visibility and free up working capital — the workflows, controls, and tooling that shorten DSO, smooth payables, and give finance leaders a real-time view of cash without…