What is contractor DSO, measured from work execution?
Contractor DSO is days sales outstanding measured from the day work was executed rather than from the day the invoice was raised, which is the only version that reflects how long a contractor actually waits for money.
Also called DSO from execution, true DSO.
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Contractor DSO in plain words
On a project, measurement, joint certification and client review all happen before an invoice can exist. Standard DSO starts after all of that, so it reports the last stretch of the wait and calls it the whole thing.
How is contractor dso calculated?
contractor DSO = standard DSO + days from execution to invoice
The second term is the one nobody reports. It is also usually the one the contractor can shorten without asking the client for anything.
Contractor DSO: a worked example
The same quarter on one project, measured both ways.
- DSO from the invoice date
- 94 days
- Days from execution to invoice
- 23 days
- Of which client review
- 23.4 days median
- Contractor DSO
- 117 days
Sample figures, consistent with the worked example in Crestline's DSO post. Your own numbers come from your ERP.
Why does contractor dso matter?
A healthy standard DSO sitting on top of a three week certification wait is the most common way an EPC business convinces itself its collections are fine.
Where does contractor dso mislead?
It is not a published benchmark and no lender will ask for it. Its value is internal: compared against your own standard DSO, the gap is the part of the cycle you control.
What do people get wrong about contractor dso?
- Benchmarking it against a published DSO
- Listed company DSO is calculated from the balance sheet, which starts at the invoice. Comparing contractor DSO against it will always look bad and will mean nothing.
- Leaving retention inside it
- Retention has no due date and ages forever. Left in the receivable, it inflates every DSO figure and hides whether ordinary collections are improving.
How does Crestline measure contractor dso?
Crestline reports DSO per client and per project from work completion as well as from the invoice date, so the share of the wait that is yours is separated from the share that is theirs before anyone picks up the phone.
The client lens