Days Sales Outstanding (DSO) by Industry: 2026 Benchmarks

Updated October 2026

DSO worsened for the third straight year in Hackett's 2026 survey, rising 2.1 days and deteriorating in 40 of 50 industries. The data covers the 1,000 largest North American public companies for FY2025. Find your industry in the full table below, or jump to the manufacturers and distributors table if you make or sell physical goods.

What Is Days Sales Outstanding (DSO)?

DSO measures how many days it takes to collect payment after a sale. It shows how fast invoices turn into cash. Low DSO means cash is moving. High DSO means working capital is stuck in receivables. Hackett calculates DSO as accounts receivable divided by (total sales divided by 365), so it uses total sales, not credit sales. For calculation methods and worked examples, see The DSO Formula and Calculation Guide.

Median DSO by Industry: All 50 Industries, FY2025 vs FY2024

This table shows the median DSO for each of the 50 industries in The Hackett Group's 2026 North American Working Capital Survey, which uses FY2025 financial statements. Industries are sorted alphabetically. A positive change means collection got slower.

Lowest and highest DSO industries

The lowest median DSO in FY2025 was in Internet and catalog retail at 5 days, followed by homebuilding at 7, food and staples retail at 8, general and specialty retail at 9, hotels, restaurants and recreation at 13, and airlines at 14. The highest was engineering and construction at 90 days, followed by aerospace and defense at 75, energy services and equipment at 73, pharmaceuticals at 70, information technology services at 69, and semiconductors and equipment at 66.

Which medians moved most

By days, median DSO rose in 25 industries, fell in 19 and was flat in 6. The largest increases were motor vehicles at +11 days, office equipment, services and supplies at +7, commercial services at +6, and telecommunications and industrial conglomerates at +5 each. The largest decreases were beverages at -7 days, wireless telecommunications at -6, and consumer durables and energy services and equipment at -5 each.

DSO for Manufacturers and Distributors

These are the industries from the same table that are most relevant to manufacturers and distributors.

How to Read These Numbers

• The sample is large public companies, not mid-market. Hackett used the 1,000 largest nonfinancial public companies headquartered in North America, based on FY2025 annual financial statements sourced from FactSet. A mid-market manufacturer or distributor has different customers, terms and bargaining power.
• DSO here is receivables over total sales, not credit sales. Trade receivables are net of allowance for doubtful accounts. Companies with a lot of cash sales will look better on this measure than on a credit sales measure.
• The table shows industry medians. Hackett's narrative numbers are aggregates. The table uses the median of company level DSO in each industry. Hackett's sector commentary, for example computer hardware DSO rising roughly 16 days, describes sector aggregates, which is why it does not match the median change of -4 days for Computer Hardware and Peripherals in the table. Both are correct. They measure different things.
• Compare your own DSO on a like for like basis. Calculate it as receivables over total sales over 365 days, then compare it to the median for your industry. Compare against your own payment terms as well.

Why DSO Is Rising

Receivables were the largest source of underlying deterioration in Hackett's 2026 survey. Aggregate accounts receivable grew 11% while revenue grew 6%. Hackett's excess working capital opportunity reached a record $1.94 trillion, up 12%. Receivables account for $773 billion of that, up 29% from $600 billion in 2024, and roughly $174 billion of the $210 billion increase in the total opportunity. This opportunity is a benchmarked performance gap, not cash available for release.

Top quartile companies improved DSO slightly while overall efficiency declined, which left a gap of roughly 20 days between the median and top performers. Only 98 companies improved their cash conversion cycle three years running.

Structural versus operational DSO

Structural DSO comes from commercial choices: negotiated payment terms, customer concentration and customer bargaining power. When a customer demands longer terms as a condition of a major contract, the seller ends up financing that customer at an unpriced cost, and collections cannot recover that cash before the agreed date.

Operational DSO comes from weak credit decisions, inaccurate order data, delayed or incorrect invoices, disputes and deductions, poor collections prioritization and slow cash application. These delays respond to process redesign.

Sector examples from Hackett

In computer hardware and peripherals, receivables grew 58% on 21% revenue growth, and DSO rose roughly 16 days as large customers extended payment terms. In media, advertising and publishing, receivables grew 52% while revenue grew 7%, and DSO deteriorated 58 days as programmatic advertising brought structurally longer payment terms. Commercial services DSO added four days as tight credit conditions slowed payment.

Before I Built Credit Pulse

Before I started Credit Pulse, I spent months talking to B2B founders about their businesses. I expected to hear about sales problems or hiring challenges. What I kept hearing about was cash.

One founder had a profitable quarter on paper and was pulling from her line of credit to cover payroll. Her DSO was sitting at 63 days. Her terms were Net 30. That 33-day gap represented working capital she did not know was missing, and she had no benchmark to tell her whether 63 days was normal for her industry or a problem she could fix. It was both. The benchmarks in this article give you what she was missing.

The Order to Cash Gap: Hackett Modeled Levels

The figures in this section are Hackett's modeled "AI World Class" levels, not observed results from real companies. Hackett says the modeled gains assume process redesign, not technology added to unchanged workflows.

• Automated credit decisions: 41% for peers vs 97% modeled.
• Average days delinquent: 9.9 days for peers vs 1.5 days modeled.
• Dispute resolution: 48 days for peers vs 27 days modeled.

Credit decisions and terms are set before an invoice is due. Hackett says the receivables problem begins before an invoice becomes overdue, with decisions about which customers receive credit and what terms they get. Credit Pulse takes digital credit applications, scores customers against your credit policy, and monitors customers for risk after approval.

Eight Ways to Reduce DSO

1. Send invoices within 24 hours of delivery.
   Every day between delivery and invoice adds directly to DSO. Companies that automate invoice generation on delivery can cut DSO before collections is involved at all.
2. Start follow-up before the due date.
   A reminder 7 days before due, not after, changes payment behavior. Automated reminders that begin before the due date can outperform post-due follow-up.
3. Screen customers before extending credit.
   Customers with weaker credit tend to pay further past terms. An upfront credit check helps you catch that risk. Running credit checks at onboarding, not after a missed payment, deals with the problem before it starts.
4. Offer early payment discounts.
   Terms like 2/10 Net 30 can reduce DSO. The 2% cost can be cheaper than carrying the receivables or drawing on a credit line.
5. Accept ACH and card payments.
   Checks are slower to clear than ACH or card payments. Companies that offer more payment methods can reduce DSO. Friction in the payment process is a DSO tax.
6. Run weekly AR aging, not monthly.
   Older invoices get harder to collect. Weekly reviews catch deterioration while it is still recoverable.
7. Build an escalation structure with hard thresholds.
   Days 1 to 7: automated reminders. Days 8 to 15: collections team outreach. Days 16 to 30: account manager. Days 31 to 60: senior management. Days 61+: agency or legal. Fuzzy escalation criteria produce inconsistent outcomes.
8. Use AR automation software.
   Automated AR platforms can improve collection efficiency, staff productivity and cash application time, especially for companies starting from a manual baseline.

A Second Benchmark: Credit Research Foundation

The Credit Research Foundation's National Summary of Domestic Trade Receivables for the second quarter of 2026 reports a median DSO of 37.5 days and a best possible DSO of 34.0 days.

Frequently Asked Questions

What is a good DSO?

It depends on your industry. In Hackett's 2026 survey, median DSO runs from 5 days for Internet and catalog retail to 90 days for engineering and construction. A good DSO is at or below the median for your industry, and close to the payment terms you actually set.

Why is DSO getting worse across industries?

Hackett found that DSO worsened for the third consecutive year, by 2.1 days, and deteriorated in 40 of 50 industries. Aggregate receivables grew 11% while revenue grew 6%. Hackett points to commercial choices such as longer negotiated terms and customer bargaining power, plus operational problems such as disputes, invoice errors and slow cash application.

What is the difference between structural and operational DSO?

Structural DSO comes from commercial choices such as negotiated payment terms, customer concentration and customer bargaining power. Operational DSO comes from weak credit decisions, inaccurate order data, delayed or incorrect invoices, disputes and deductions, poor collections prioritization and slow cash application. Operational delays respond to process redesign.

Can I compare my company's DSO to these medians?

Compare with care. Hackett's sample is the 1,000 largest North American public companies, not mid-market firms, and its DSO is receivables over total sales, not credit sales. Calculate your own DSO the same way before you compare it to a table median.

What is the DSO for manufacturers and distributors?

In the 2026 survey, FY2025 median DSO was 48 days for Chemicals, 45 days for Building Products, 56 days for Automotive Parts and Aftermarket, and the manufacturer and distributor table above lists the rest. Use the row closest to your products as a starting point, not a target.

What does the Credit Research Foundation report for DSO?

The Credit Research Foundation National Summary of Domestic Trade Receivables for the second quarter of 2026 reports a median DSO of 37.5 days and a best possible DSO of 34.0 days.

Sources

• The Hackett Group, 2026 North American Working Capital Survey (press release, October 5, 2026)
• Credit Research Foundation, National Summary of Domestic Trade Receivables