How to reduce DSO: getting paid faster in an Indian B2B business

Last reviewed 22 October 2026. General information, not legal or tax advice.

Days sales outstanding (DSO) is the average number of days your customers take to pay. Lower DSO means more cash in the bank without selling more. Work out yours with the free DSO calculator.

Before the sale

Agree credit terms in writing and set a credit limit per customer. If you are a registered micro or small enterprise, show your Udyam number on quotes and invoices: buyers must pay you within 45 days at most, and Section 43B(h) gives their finance team a tax reason to do so (see the 43B(h) guide).

At invoicing

Invoice on the day of delivery, with the PO number, delivery proof and due date. Missing details are the most common reason an invoice sits unpaid in the buyer’s approval queue.

After invoicing

• Send a friendly reminder a few days before the due date — it catches problems while there is still time.
• Follow up on a fixed schedule after the due date, one message per customer covering all their open bills.
• Ask for and record an expected payment date; follow up on that date if the money has not arrived.
• Put a UPI QR or payment link in every reminder.
• Match bank receipts to invoices promptly, so you never chase a customer who has already paid.

Review the slow payers

Every quarter, look at customers who repeatedly break promises or pay far beyond terms. Shorter terms, smaller credit limits or advance payment for new orders protect your cash.

Doing it without the manual work

Tagaada runs this routine for you: it scores each customer by amount, age and payment history, follows up before and after due dates on WhatsApp and email, tracks promises, and matches bank receipts to invoices. It is free while we grow.

Frequently asked questions

Sources

• DSO calculator (Tagaada)