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Winning new business is important—but converting sales into cash is where sustainable growth really happens. If you’ve ever faced late invoices or cash flow hiccups, you’re not alone. The good news? With the right approach, you can take control of your receivables and keep your cash moving.

That’s where Days Sales Outstanding (DSO) comes in. It’s one of the most powerful indicators of financial health, and with a few smart strategies, you can lower it and free up working capital. In this guide, we’ll explore actionable strategies to reduce DSO and strengthen your company’s financial position.

What is DSO (days sales outstanding)?

Days sales outstanding measures how long it takes, on average, for your company to collect payment after making a sale. It’s calculated using this formula:

DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days

For example, if your company has $60,000 in accounts receivable and $300,000 in credit sales over a one-year period: DSO = ($60,000 ÷ $300,000) × 365  = 73 Days

This means it takes your company an average of 73 days to collect payment after making a sale.

DSO varies significantly by industry—software companies might see 30-45 days while construction companies often experience 60-90 days. However, regardless of your industry benchmark, there’s almost always room for improvement.

Why does DSO vary between industries? 

DSO varies significantly due to industry-specific factors such as the following –

Payment terms: Industries like construction have milestone-based payments, resulting in longer cycles.

Client relationships: Professional services often depend on client approvals, which can
delay payments.

Product lifecycle: Retail sectors require rapid turnover, thus incentivizing quicker
Payments.

Regulatory environment: Healthcare payments, for example, involve complex insurance processes, potentially slowing payments.

Why minimizing DSO should be a top priority

Cash flow Is king
Uncollected invoices keep your cash out of reach. Lower DSO means faster access to cash for operations, payroll, growth, and unexpected opportunities or challenges.

Lower risk & costs
Faster payments reduce bad debt, minimize costly collection efforts, and free staff for higher-value work.

Stronger customer relationships
Proactive payment processes minimize awkward collection calls and foster trust. By setting clear expectations and offering convenient payment options, businesses create a more positive and seamless experience for customers.

Better planning & competitive edge
Consistent, predictable cash flow gives you the confidence to budget accurately, plan strategically, and make faster decisions. 

How is DSO relevant to CFOs, controllers, and billing specialists?

DSO is especially relevant to financial leadership and operational roles:

CFOs use DSO to project cash flow and plan investments. When DSO is high, they lose strategic flexibility.

Controllers rely on DSO to assess AR team performance and flag financial risk.

AR Specialists need visibility into DSO so they can follow up efficiently, invoice cleanly, and escalate delays before they snowball.

Strategies to reduce your days sales outstanding

1. Strengthen your credit and customer management foundation

Implement Rigorous Credit Approval
Don’t let enthusiasm for new sales override prudent credit decisions. Establish clear credit approval processes that include:

  • Credit applications for all new customers
  • Credit checks and reference verification
  • Setting appropriate credit limits based on financial strength
  • Regular reviews of existing customer creditworthiness

Segment Your Customer Base
Not all customers are created equal. Develop different strategies for:

  • High-volume, reliable customers (offer incentives, streamlined processes)
  • New or unknown customers (shorter terms, deposits)
  • High-risk customers (COD, prepayment, or enhanced monitoring)

2. Optimize your invoice process for speed and accuracy

Eliminate Invoice Delays
Send invoices immediately upon delivery or service completion. Every day you delay invoicing is a day added to your DSO.

Ensure Invoice Accuracy
Incorrect invoices create disputes, delays, and customer frustration. Your invoices should include:

  • Clear, detailed descriptions of products or services
  • Accurate quantities, prices, and calculations
  • Purchase order references where applicable
  • Clear payment terms and due dates
  • Multiple payment method options

3. Revolutionize your payment terms and incentive structure

Offer strategic early payment discounts
A 2% discount for payment within 10 days (2/10 net 30) can significantly accelerate cash flow while still maintaining healthy margins. Calculate the annual cost of offering discounts versus the benefit of improved cash flow and determine which makes more sense financially.  

Negotiate shorter payment terms
Where market conditions allow, move from 30-day to 15-day terms, or even immediate payment for smaller transactions. This is particularly effective with new customers who haven’t yet established payment patterns.

Implement Progress Billing
For large projects or ongoing services, bill in stages or monthly rather than waiting until completion. This reduces both your risk and the customer’s payment shock.

4. Transform your collections and follow-up process

Establish Systematic Follow-up Procedures
Don’t wait until invoices are overdue to engage. Implement a structured communication schedule:

  • Friendly reminder 5 days before due date
  • Payment due notification on due date
  • First follow-up 5 days after due date

🚀 Where Skyline Payments can make the difference: We offer automated reminder systems that eliminate the manual burden of follow-ups while ensuring no customer falls through the cracks. Customers receive professionally crafted reminders via email or text, with embedded payment links for immediate action. This approach can reduce late receivables by up to 40% while freeing your staff for higher-value activities.

5. Leverage technology and automation for maximum impact

Implement Automated Reminder Systems Manual follow-ups are time-consuming and inconsistent. Automated systems ensure every customer receives timely, professional reminders without consuming staff resources.

Provide Multiple Payment Channels The easier you make it for customers to pay, the faster they will. Offer:

  • Online payment portals
  • Mobile-friendly payment options
  • ACH/bank transfers
  • Credit card processing
  • Text-to-pay functionality

🚀 Where Skyline Payments can make the difference: Our comprehensive payment solution addresses multiple pain points simultaneously:

  • Self-service customer portal: Customers can view all invoices, make partial or full payments, and manage their payment methods without calling your office
  • Multi-invoice payments: Allow customers to pay multiple invoices in a single transaction, reducing friction
  • Unlimited saved payment methods: Customers can securely store multiple payment options for convenience
  • Text-to-pay: Send payment links via SMS for immediate mobile payments
  • Autopay options: Customers can set up automatic payments, virtually eliminating late payments

6. Streamline internal processes to eliminate delays

Optimize your order-to-cash process
Identify bottlenecks, approval delays, and manual handoffs that slow down the process from order receipt to cash collection. Common areas for improvement include:

  • Order processing and fulfillment
  • Invoice generation and approval
  • Delivery confirmation and invoice dispatch
  • Payment processing and application

Integrate your systems
Multiple disconnected systems create opportunities for errors, delays, and lost information. Integration between your ERP and payment processing systems enables seamless data flow and automated processes.

🚀 Where Skyline Payments can make the difference: We sync directly with popular ERP and accounting systems, eliminating double data entry and ensuring payments are automatically recorded and reconciled. This helps to reduce errors, save time, and provide real-time visibility into your cash position.

7. Optimize costs while improving collections

Strategic fee management
Processing fees can significantly impact your margins, but the right approach can actually improve your cash flow:

  • Implement service fee pass-through to customers for credit card payments
  • Utilize ACH processing for lower-cost transactions
  • Take advantage of Level 3 processing for B2B transactions (up to 30% rate reduction)
  • Negotiate better rates based on volume and payment mix

🚀 Where Skyline Payments can make the difference: our advanced payment platforms can automatically apply service fees to customer payments, recovering your processing costs while maintaining competitive pricing. Combined with optimized rate structures and ACH alternatives, our customers often save thousands annually on processing fees.

The bottom line: transform your cash flow today

Every day DSO goes unchecked is cash trapped in receivables. Process improvements and customer-friendly practices can help, but lasting change comes from streamlining and automation.

Modern AR tools simplify payment, reduce manual effort, and remove friction for both you and your customers. The result isn’t just faster collections—it’s stronger cash flow, lower costs, and more time to focus on growth.

Improving DSO isn’t about chasing payments—it’s about building a smarter, more streamlined operation. This is why thousands of businesses use Skyline Payments to help improve their cash flow.

“Honestly, you’re the best solution in the marketplace.”

– Kyle Lim, President of Power Dental Group


Power Dental Group, a fast-growing family-owned dental instrumentation and manufacturing company, experienced growing challenges with outdated, manual invoicing and payment processes.

As the business expanded, so did the strain — rising past-due invoices began to impact cash flow and margins, making it clear that the existing system couldn’t keep up.

When Kyle Lim took over as President, he saw firsthand how their system was holding them back. They needed a modern billing and accounting solution, but finding the right ERP was a challenge.

As they navigated three different ERP transitions in search of the best fit, Skyline Payments remained their trusted partner, integrating seamlessly with every system and ensuring uninterrupted payment processing.


Rising Past Due Invoices & Outgrowing Manual Payments

Power Dental’s old payment system was slow, clunky, and full of friction.

“Our collections were a disaster. 50% of our AR was past due. Customers had to call in and read their credit card numbers over the phone, and we’d manually enter them into QuickBooks Desktop.”

Beyond the hassle, tracking was a challenge.

“We just couldn’t track everything properly. There was no automation, just a lot of manual reminders and double-checking.”

Automating Collections & Reducing Past Due Invoices

After an initial call, Power Dental realized Skyline wasn’t just another payment processor — it was an entire system built to eliminate the headaches they’d been dealing with for years.

“From day one, Skyline just made things easy. They connected directly into QuickBooks, so we didn’t have to manually enter credit cards anymore. Customers could pay online through a secure link instead of calling in. Collections became automatic instead of a constant chase.”

The results came fast. The impact on cash flow was immediate.

“Within months, we saw a huge drop in past-due invoices. Our past-due invoices dropped by more than 50%. Payments came in faster, with way less effort from our team.”

Growing Pains: Searching for the Right ERP to Scale

As Power Dental grew, they knew QuickBooks alone wasn’t enough. They needed a scalable ERP to manage operations and inventory, but that introduced a new problem: Would Skyline still work with our new system?

Their first attempt was Netsuite, but it quickly became clear it wasn’t the right fit.

“NetSuite was way too big, too complex. And payments were a nightmare because they preferred their own processors. I thought we’d have to drop Skyline.”

Instead, Skyline stepped up and accelerated their integration with NetSuite.

“I called Kevin and said, ‘Is there any way we can make this work?’ He didn’t hesitate. He figured it out and got us integrated. That’s the kind of support you don’t get from a typical processor.”

Over time, Power Dental moved through three ERP systems: NetSuite, Fulcrum, and now Priority, and Skyline adapted to every transition.

“Every time we switched ERPs, Skyline made sure our payments kept running smoothly. It was never ‘we can’t do that’, it was always ‘let’s figure it out.’ That level of support is unheard of.”

Skyline Payments: Lowest Credit Card Rates & Unmatched Customer Support

Beyond the technical support, Power Dental was blown away by the low processing rates Skyline provided.

“Look, credit card fees are a huge deal. Skyline’s rates are way better than what we’d get elsewhere, and they worked with us to find the best structure for our volume. That alone saved us a ton of money.”

Most importantly, they could finally scale without payments slowing them down.

“I’m always asking, ‘How can we cut out unnecessary steps? How do we remove human error?’ Because that’s when problems happen. Skyline eliminated the need for manual processing — we just send the payment link, and it’s done. The entire process runs itself.

Finding a Partnership Built For the Long Haul

No matter how many times Power Dental changed systems, scaled up, or evolved, Skyline made sure payments were never a problem.

“At the end of the day, Skyline isn’t just a payment processor. They’ve been a true partner in our growth. If you’re struggling with outdated, inefficient payments, Skyline will change the game for you, just like they did for us.”

As CFO of Land Care Management Services, Diana Stonecipher oversees all aspects of the accounts receivable process. Previously, she relied on Intuit for credit card processing but faced ongoing frustrations with the system’s limitations. Seeking a more efficient, automated solution, Diana ultimately turned to Skyline Payments to implement B2B self-service payments and automated surcharging.

The Challenge: Manually Passing On Credit Card Fees

Diana’s experience with Intuit left her dealing with time-consuming, manual tasks. “When a customer wanted to pay by credit card, they had to call me. I’d have to add the fee manually. It was a bit of a pain,” Diana shared. The lack of automation in fee processing created extra work for her and often frustrated customers who couldn’t pay independently.

Additionally, Intuit’s AI-driven reconciliation often made mistakes. “You’d go to reconcile, and it would be wrong. This led to more work needed to maintain accuracy.”

The Solution: Automating Surcharges & Payment Method Selection

When Diana switched to Skyline Payments, one feature stood out to her immediately — Skyline’s automated surcharge management that allowed her to pass on credit card fees and customers to select the payment method they preferred.

“With Skyline, I don’t have to be the middleman. Customers can look at their bill, decide if they want to pay with a credit card and pay the fee or choose another form of payment. This gives them more autonomy, while allowing me to remove myself as the bottleneck.”

The smooth setup process and responsive customer support helped seal her decision. “Any hiccups we had were minor, and someone was always there to fix it,” Diana recalled.

The Key Benefits: Efficiency, Customer Autonomy, and Stellar Support

Skyline Payments provided Land Care with several significant improvements:

  1. Seamless transactions: “It’s all automatic. Skyline creates the invoice for the fee in Quickbooks Online and records it with the correct account. I don’t have to even think about it, which keeps things streamlined.”

  2. Customer autonomy: “Customers can now pay invoices independently through an intuitive portal. They can now pay all invoices at once or pick and choose — no more digging through emails,” Diana said, adding, “No one wants to do that much work.”

  3. Responsive customer support: “Skyline’s customer support was a standout feature for me. I actually get to talk to a real human. Yesterday, I had a large transaction that was placed on hold, and they helped me clear it up immediately.”

The Impact: Automated Payments, Happier Customers, & Faster Receivables

Skyline Payments has reduced Diana’s time on manual tasks and improved customer satisfaction by empowering clients with self-service options. “It’s saved us a lot of time, especially with customers now choosing online payment methods,” she said. Her clients appreciate the flexibility, too: “They can pay at midnight if they want, on their schedule. No one wants to call and give a credit card number over the phone.”

For Diana, the shift has also aligned with a growing trend toward digital payments. “More people are paying by ACH and credit card than before because it’s easy, secure, and they can do it whenever they like,” she added.

Before Skyline Payments: Invoicing Was a Time Consuming, Manual Nightmare

Managing payments and accounts receivable (AR) for a medical waste management company with over 4,000 customers and 16,000 service sites is no small task.

“Billing that many customers was a nightmare,” recalled Omar Gomez, the CFO of Allied Medical Waste. Payments arrived in various forms — virtual payments, checks, and credit cards — creating major reconciliation challenges.

Without autopay and automated workflows, their two-person AR team spent three full days every month manually running payments and reconciling transactions.

“It just wasn’t scalable.”

After Skyline Payments: Automated & Scalable Accounts Receivable Workflows

“That’s when we started looking for other solutions. Switching to Skyline Payments was a game-changer. We were able to cut it from three days to one day or less.”

Overnight, the manual payments processed transformed into a seamless, automated system. “The system actually does what it promises — automates payments so we don’t have to touch them,” he said.

The shift from manual labor to automation freed the finance team to focus on strategic initiatives instead of administrative tasks. “A few weeks ago, we were discussing how we need to work on the business rather than in the business,” he said. “Georgina, one of my team members, immediately said, ‘Skyline Payments is the perfect example of that.'”

The impact was undeniable. “Less time, fewer headaches, and, honestly, less hair loss,” he joked. “It was a great call to partner with Skyline — easily one of the best decisions we’ve made.

The Best Part? Unparalleled Customer Support & Self-Service B2B Payments

“What really sets Skyline apart is their customer support. Michelle is outstanding. Whenever we bring a problem, she does the research, and if she doesn’t have an answer, she’ll network within the team to find one.”

“For example, I wanted to offer our customers a self-service option to pay invoices online. Michelle worked on customizing our email templates and then brought in Victor, who helped write code for a ‘Pay My Invoice’ portal directly on our website.”

“That blew my mind, because I knew that they were definitely providing help that was outside of the scope of service that customer support would normally provide.”

The Impact: Efficiency, Security, and Peace of Mind

Beyond streamlining operations, Skyline Payments significantly reduced administrative burden and enhanced security. “We used to process payments over the phone, but that has virtually disappeared. Customers now prefer the secure, online payment links we provide.”

With Skyline Payments, Allied Medical Waste has not only optimized its AR processes but also empowered customers, strengthened compliance, and reclaimed valuable time — allowing them to work on their business, not just in it. 

Many businesses accept the credit card fees as a necessary expense, but what if there was a way to reduce these costs?

Enter Level 3 Credit Card Processing — a lesser-known, but powerful solution that enables B2B businesses to qualify for the lowest interchange rates available.

Let’s explore how Level 3 processing works, why it reduces fees, and how automation makes it easier than ever to take advantage of these savings.

 

Understanding Level 2 and Level 3 Credit Card Processing

A table showing the types of data required for each level of processing.

 

Every time a business processes a credit card payment, they incur interchange fees set by card networks (Visa, Mastercard, etc.). Processing levels are categorized into three tiers — based on what data is provided:

 

  • Level 1: Basic transaction details
  • Level 2: Additional data
  • Level 3: The most detailed data — qualifying for the lowest interchange rates.

 

Card networks offer lower interchange rates for Level 3 transactions because they are considered lower risk compared to standard transactions. The additional data provided — such as itemized details, tax amounts, and shipping costs — helps card issuers verify the legitimacy of a transaction, reducing the likelihood of fraud or chargebacks. Since banks and card networks have greater confidence in the accuracy of Level 3 transactions, they reward businesses by offering reduced interchange fees.

 

What are Level 3 Data Requirements?

Level 3 processing requires detailed transaction data, including:

  • Item descriptions
  • Quantities
  • Unit pricing
  • Tax rates
  • Freight costs
  • Supplier and customer information

 

This extra data allows card networks to categorize transactions as lower-risk, leading to reduced interchange fees. While primarily intended for government and corporate cards, any business processing B2B payments can benefit from these lower rates.

 

The Cost-Saving Impact of Level 3 Processing

The savings from Level 3 processing can be substantial. For example, a standard corporate credit card transaction might have an interchange fee of 2.65%, while a Level 3 qualified transaction could lower it to 2.05% or less. Over thousands of transactions, these savings add up quickly, improving profit margins and reducing operational costs.

 

Consider this comparison:

 

Transaction
Volume
Average Standard Rate 
(2.65%)
Average Level 3 Rate
(1.85%)
Annual
Savings
$250,000 $6,625 $4,625 $2,000
$500,000 $13,250 $9,250 $4,000
$1,000,000 $26,500 $18,500 $8,000
$2,000,000 $53,000 $37,000 $16,000

For businesses processing millions in transactions annually, these reductions can be game-changing.

 

Challenges of Manual Level 3 Processing

While Level 3 processing offers undeniable savings, manually inputting the required data poses challenges:

  • Time-Consuming: Employees must enter extensive transaction details, increasing workload.
  • Prone to Errors: Incorrect or incomplete data can disqualify transactions from Level 3 rates.
  • Operational Bottlenecks: Manual entry slows down processing, reducing efficiency.

 

Given these obstacles, businesses often bypass Level 3 processing, leaving money on the table. Fortunately, automation eliminates these challenges.

 

Get Level 3 Processing with Skyline Payments

While other solutions require merchants to manually enter all the level 3 data requirements, Skyline Payment’s automated Level 3 processing ensures that all required transaction data is included without manual intervention. Here’s how it works:

  • Seamless Data Capture: Payment gateways automatically pull itemized data from invoices.
  • System Integration: Level 3 processing integrates with ERP and accounting software for real-time data entry.
  • Error Reduction: Built-in compliance checks ensure transactions qualify for the lowest rates.

With automation, businesses can scale their operations without worrying about processing inefficiencies or lost savings.

 

Next Steps

Want to see how much you could save with Level 3 processing? Contact our team today for a free cost-savings analysis!

Every credit card transaction means that a percentage of your revenue goes to payment processors and interchange fees — money that could otherwise be reinvested in your business.

But what if you could accept credit card payments without paying processing fees? The good news is: you can.

This guide will walk you through no-fee credit card processing, how it works, and the best way to implement it in your business.

Is No-Fee Credit Card Processing Really Possible?

In reality, there’s no such thing as truly free, zero-fee, or no-fee credit card processing — the costs still exist, they’re just shifted. The most effective way to stop paying these fees yourself is by passing them to customers through a compliant surcharge program.

How Passing on Fees Works

When a customer pays with a credit card, they cover the processing fee instead of your business. This allows you to:

  • Keep 100% of your transaction amount—no more absorbing processing costs.
  • Give customers a choice—they can pay via ACH, debit card, or cash to avoid the fee.
  • Ensure full transparency—fees are clearly displayed on receipts, so there are no surprises.

 

Check Your State’s Regulations

Some states, including Connecticut and Massachusetts, have restrictions on passing credit card fees to customers. Always verify your local laws to ensure compliance before implementing a fee program.

Manual Credit Card Surcharge Management in Quickbooks

QuickBooks does not support built-in automations for credit card fees, meaning businesses must handle fees manually—a process that can be time-consuming, error-prone, and difficult to manage for compliance.

If you choose to pass on fees manually, you’ll need to:

  • Calculate and apply surcharges for each transaction.
  • Create separate line items to reflect the added fees.
  • Reconcile fees separately from payments, adding complexity to your accounting.
  • Ensure compliance with state laws and card network rules on your own.

 

The Smarter Solution: Automating Fees & Payment Selection with Skyline Payments

Manually managing credit card surcharges is time-consuming — Skyline Payments eliminates these inefficiencies by automating both fee application and payment selection, ensuring a seamless experience for businesses and their customers.

 

Automate Fee Processing & Payment Selection

Instead of manually adjusting invoices or chasing customers for payment details, Skyline Payments provides a self-service payment portal where customers can:

  • Select their preferred payment method—ACH (no fee) or credit card (with a clearly disclosed fee).
  • See total costs upfront, reducing confusion and back-and-forth communication.
  • Make payments 24/7 without requiring merchant intervention.
  • Receive instant payment confirmation, ensuring smooth transaction processing.

With this self-service approach, businesses no longer have to handle payment selection via email or phone, saving time and reducing friction.

 

Seamless QuickBooks Integration for Automated Accounting

For QuickBooks users, Skyline Payments eliminates the need for manual reconciliation by:

  • Syncing transactions and fees automatically, ensuring financial records stay accurate.
  • Categorizing surcharges correctly, keeping books clean and compliant.
  • Providing a full audit trail, making compliance and tax preparation effortless.

 

Save Time & Keep 100% of Your Revenue

By automating both surcharge management and payment selection, Skyline Payments helps businesses save hours each week, eliminate errors, and ensure they keep 100% of their revenue—without absorbing credit card processing costs.

 

Is Passing On Credit Card Fees Legal?

In the majority of states, passing on credit card fees is legal, as long as businesses follow basic guidelines.

General Guidance

  • Fee disclosure – Customers must see the fee before completing the payment
  • Max surcharge – Check local guidelines for your surcharge cap
  • Alternative payment options – Customers should have a way to avoid the fee (e.g., ACH)

By following these simple rules — and verifying your local laws — you can eliminate credit card processing fees.

 

Best Practices by Business Type

    • B2B Businesses – Passing on fees is widely accepted.
      • Tip: Offer ACH payments as a preferred, lower-cost alternative.

 

    • Retail & E-commerce – Customers may resist added fees.
      • Tip: Clearly disclose fees upfront or adjust pricing to absorb costs.

 

    • Professional Services – Client relationships matter.
      • Tip: Offer invoice discounts for ACH or check payments.

 

  • Hospitality & Restaurants – Customer experience is key.
    • Tip: Consider using a cash discount program instead of adding fees.

 

Final Thoughts: Should Your Business Implement No-Fee Credit Card Processing?

If your business processes a high volume of credit card payments, switching to a zero-fee credit card processing model is a game changer.

You’ll:

  • Preserve your profit margins
  • Reduce operational headaches
  • Give customers transparent payment options
  • Eliminate QuickBooks’ and ERP surcharge limitations

And with Skyline Payments, this transition is effortless.

 

Ready to Automate Fees & Empower Customers to Choose How They Pay?

Book a demo and start passing on fees — without the extra work or hassle.

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