The spreadsheet showed the brutal truth:
The CFO of a €20M logistics company stared at numbers that spelled disaster. Despite healthy revenue growth, their cash position was critical. The cause? A DSO (Days Sales Outstanding) of 120 days that was strangling their business.
This is the story of how they recovered €4.2M in 90 days and permanently reduced DSO to 45 days.
📊 The Starting Point: 120 Days of Waiting
| Customer Segment | Revenue Share | Avg Payment Days | Risk Level |
|---|---|---|---|
| Top 5 Customers | 62% | 95 days | Medium |
| Next 15 Customers | 28% | 140 days | High |
| Remaining 80+ | 10% | 180+ days | Critical |
🔧 The 5-Step Framework That Cut DSO by 62%
Customer Segmentation
Risk-based categorization of all accounts
Terms Restructuring
Segment-specific payment terms
Enforcement Protocol
Day-by-day escalation process
Professional Recovery
Strategic agency partnership
Performance Dashboard
Real-time KPI monitoring
Step 1: Customer Segmentation by Risk
Not all customers are equal. The first step was creating a risk-based segmentation model:
🟢 Segment A: Premium
Criteria: 5+ years relationship, consistent on-time payment, strong financials
Treatment: Standard terms, relationship-focused approach
Count: 12 customers (Top 5 + 7 strong performers)
🔵 Segment B: Standard
Criteria: 2-5 years relationship, occasional delays under 15 days
Treatment: Proactive reminders, early payment incentives
Count: 35 customers
🟡 Segment C: Watch List
Criteria: New customers OR history of 30+ day delays
Treatment: Stricter terms, deposits required, close monitoring
Count: 28 customers
🔴 Segment D: High Risk
Criteria: 60+ day payment history, disputes, financial concerns
Treatment: Prepayment only, reduced credit limits, agency escalation
Count: 20+ customers
Step 2: Payment Terms by Segment
| Segment | Standard Terms | Early Payment | Late Payment |
|---|---|---|---|
| A: Premium | Net 45 | 2% discount @ 10 days | 1.5% monthly |
| B: Standard | Net 30 | 2% discount @ 10 days | 1.5% monthly + calls |
| C: Watch List | Net 21 + 30% deposit | 3% discount @ 7 days | Service pause @ Day 30 |
| D: High Risk | Prepayment required | N/A | Immediate escalation |
Step 3: The Day-by-Day Enforcement Protocol
Pre-Due Reminder
Friendly email reminder with invoice attached and payment options
Due Date Call
Personal phone call to confirm receipt and expected payment date
Second Notice
Formal written reminder with late fee calculation preview
Management Escalation
Senior contact outreach, payment plan discussion offered
Credit Hold
New orders paused, formal demand letter sent
Agency Transfer
Professional collection agency engaged
Step 4: Strategic Agency Partnership
For accounts beyond 45 days, professional intervention proved dramatically more effective:
"We hesitated to involve a collection agency—worried about customer relationships. The reality? Professional handling actually preserved more relationships than our frustrated internal calls."
— CFO, Logistics CompanyStep 5: Real-Time Performance Dashboard
Compensation Alignment: AR team bonuses were tied to DSO reduction targets—achieving 45-day DSO unlocked a 15% quarterly bonus.
📈 The Results: A Complete Turnaround
Customer Retention Impact
0 of 8 complete🎯 Applying This Framework to Your Business
The 5 problems this framework solves:
Cash Flow Strain
Waiting 90+ days for payment while bills are due monthly
Financing Costs
Paying interest on credit lines to cover receivable gaps
Growth Constraints
Unable to take new orders due to working capital limits
Bad Debt Risk
Older receivables convert to write-offs at alarming rates
Team Frustration
AR staff burned out from chasing the same accounts
Implementation Timeline
Analysis and Segmentation
Complete customer risk assessment and categorization
Terms Communication
Roll out new terms with customer-specific messaging
Protocol Activation
Implement enforcement protocol, train AR team
Agency Integration
Establish collection partner workflow, transfer first accounts
💡 The Bottom Line
DSO is a Choice
120-day payment cycles are not inevitable—they are a policy and enforcement issue that can be fixed.
Segmentation Enables Focus
Treating all customers the same wastes resources. Risk-based approaches are 3x more effective.
Professional Help Works
Collection agencies recover 3x more than internal teams on aged accounts—and often preserve relationships better.
Ready to Reduce Your DSO?
Whether your DSO is 60 days or 160 days, the same framework applies. Start with the accounts that matter most and build systematic collection muscle.
Need help with aged receivables? Our B2B collection specialists can recover what internal efforts cannot—with a success-based model that costs nothing unless we collect.
Sarah Lindberg
International Operations Lead
Sarah coordinates our global partner network across 160+ countries, ensuring seamless cross-border debt recovery.
