Manufacturing DSO has climbed to historic highs. The lever to release working capital sits at the moment of payment, not in collections intensity.
When days sales outstanding climbs, the reflex inside most finance teams is to turn to the collections department. More calls. Tighter dunning cadences. Pressure on customers who are slow to pay. The thinking is that if cash is moving slowly, someone needs to push it harder.
For manufacturers, that reflex is misdirected. The biggest lever on DSO does not sit with the collections team. It sits earlier in the workflow, at the moment of payment itself.
The biggest lever on DSO does not sit with the collections team. It sits earlier in the workflow, at the moment of payment itself.
How high manufacturing DSO has become
The starting point is recognizing how far manufacturing DSO has drifted from the rest of the economy. Allianz Trade’s June 2025 analysis of approximately 45,000 listed firms globally found that transport equipment manufacturers carry an average of 87 days of DSO. Machinery and equipment manufacturers carry 83. Electronics carry 83. The global all-sector average sits around 62 days. Across these manufacturing sub-sectors, DSO rose for a third or fourth consecutive year in 2024.1
Globally, 44% of firms now have DSO above 60 days, and 21% above 90. Working capital requirements have climbed to 78 days, the highest level since 2008.1
For a manufacturer, this means working capital is moving in the wrong direction. Cash that should be funding operations is sitting in receivables, and the gap between top performers and the rest is widening.
The cost in cash terms
The cost of that trapped cash is now quantified at scale. The Hackett Group’s 2025 US Working Capital Survey, based on the 1,000 largest US public nonfinancial companies, identified $1.7 trillion in excess working capital. Accounts receivable is the single largest component at approximately $600 billion. DSO degraded for a second consecutive year, driven by buyers extending payment terms.2
Translated to a single company, the math is straightforward. Each day of DSO equals revenue divided by 365. For a manufacturer with $100 million in annual revenue, one day of DSO represents about $274,000. A 10-day reduction releases roughly $2.74 million.
$2.74M
released from receivables by a 10-day DSO reduction
In a higher cost-of-capital environment, that trapped cash is the most affordable liquidity on the balance sheet. It does not require new debt or new credit. It requires faster collection.
Why chasing harder stops working
Once the scale of the problem is clear, the next question is what actually moves it. The conventional answer is more collections effort. The data argues otherwise.
Hackett attributes the recent rise in DSO to a structural shift: customer bargaining power drove extended payment terms in 2024.2 When customers can extend terms by negotiation, the lever sits with the contract, not the collector.
No dunning cadence moves a 70-day negotiated term. No additional collections headcount changes a contractual commitment. When the driver of high DSO is buyer behavior and workflow friction, collections intensity is the wrong lever. The lever must act earlier.
The friction sits in the moment of payment
Workflow friction is concrete. It lives in the moment a customer tries to pay an invoice.
The 2025 AFP Digital Payments Survey shows that B2B check usage in the US and Canada has fallen from 81% in 2004 to 26% in 2025. The transition is far from complete. The Federal Reserve’s 2024 Business Payments Study found that two-thirds of medium and large U.S. firms still use paper checks.3, 4
AFP found that 81% of organizations cite reduced manual processes as a top benefit of digital payments, 74% cite reduced fraud and errors, and 63% cite enhanced AP process automation. Each of those benefits compresses the time between sending an invoice and receiving payment.3
The link to DSO is direct. When the act of paying is slow, when customers must leave their normal workflow to send a payment, when reconciliation requires manual matching on both sides, payment happens later. When it is easier, payment happens sooner.
What changes when payments live inside the ERP
The practical alternative to collections intensity is to remove the friction at the source. That means moving payments inside the ERP rather than outside it.
When payments are embedded in the ERP, the workflow changes. Invoices include a pay-now link sent directly to the customer. Payments process inside the ERP, not in a separate portal. AR records update in real time as payments arrive. Reconciliation runs automatically against open invoices. Finance sees cash position without exporting, matching, or chasing.
| Workflow attribute | Outside the ERP | Inside the ERP |
|---|---|---|
| Invoice delivery | Manual send, often check by mail | Pay-now link in invoice |
| Payment processing | Separate portal, customer leaves workflow | Native to the ERP |
| AR update | Manual entry or batch import | Real-time as payments arrive |
| Reconciliation | Manual matching on both sides | Automated against open invoices |
| Cash visibility | Export, match, chase | Real-time view in finance |
Figure 1. Workflow attributes shift across five dimensions when payments live inside the ERP.
The outcome is fewer manual touchpoints, not more. McKinsey’s 2025 working capital research found that companies can improve their combined accounts payable and receivable balance by 30% or more within weeks, often without significant supplier or customer interaction, by coordinating process mapping, technology adoption, and performance management. The Hackett Group’s 2025 data puts a number on the prize at the company level: an 18-day gap between top-quartile and median DSO performers. Top performers have already captured that gap by running cleaner AR workflows.2, 5
For a manufacturer, this is the difference between AR as a reactive function chasing late payments and AR as a real-time view of cash that finance can act on.
Why this matters more now
The pressure to act is already showing up in finance leader priorities. The Hackett Group’s 2025 Finance Key Issues Study found working capital optimization ranked as the number-one finance priority, a notable shift from prior years. Deloitte’s Q4 2025 CFO Signals survey of 200 North American CFOs at companies with over $1 billion in revenue found that 50% cite digital transformation of finance as their top 2026 priority, with cash management optimization second.6, 7
The rest of the finance world is moving on this. Manufacturers who move first capture the working capital release first.
The lever, and where it lives
DSO is a payments problem, not a collections problem. The lever is removing friction from the moment of payment, not adding pressure to the team that chases late ones.
For Syspro customers, that lever sits inside the ERP they already run. Nuvei, Syspro’s preferred payments partner, brings embedded payments directly into the Syspro workflow via PayThem, Syspro’s Payment Gateway. Sales orders, AR, and payment processing connect natively. Reconciliation happens automatically. Cash position updates in real time. Learn more about the Nuvei integration on the Syspro Marketplace.
Sources
- Allianz Trade. Global DSO and Working Capital Report. June 2025. Analysis of approximately 45,000 listed firms globally. https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/economic-research/publications/specials/en/2025/june/2025-06-18-DSO.pdf
- The Hackett Group. 2025 U.S. Working Capital Survey. August 2025. Analysis of the 1,000 largest U.S. public nonfinancial companies. https://www.thehackettgroup.com/2025-working-capital-survey-payables-rebound-receivables-inventory-lag/
- Association for Financial Professionals (AFP). 2025 Digital Payments Survey: A Triennial Publication. Underwritten by J.P. Morgan. Released September 23, 2025. Survey of 223 corporate practitioners based in the U.S. and Canada. Key highlights at https://www.jpmorgan.com/insights/payments/trends-innovation/afp-digital-payments-survey-2025
- Federal Reserve Financial Services. 2024 Federal Reserve Payments Insights Brief: Business Payments Study. Survey fielded Q3 2024, surveying 2,005 U.S. businesses stratified by revenue size and industry. https://fedpaymentsimprovement.org/wp-content/uploads/2024-federal-reserve-payments-insights-business-study.pdf
- McKinsey & Company. Gain transformation momentum by optimizing working capital. January 2025. https://www.mckinsey.com/capabilities/transformation/our-insights/gain-transformation-momentum-early-by-optimizing-working-capital
- The Hackett Group. 2025 Finance Key Issues Study. Finding referenced in The Hackett Group’s 2025 U.S. Working Capital Survey press materials. https://www.thehackettgroup.com/2025-working-capital-survey-payables-rebound-receivables-inventory-lag/
- Deloitte. Q4 2025 CFO Signals: CFO Expectations for 2026. Released January 13, 2026. Survey of 200 CFOs at North American companies with at least US$1 billion in annual revenue, conducted November 14 to December 7, 2025. https://www.deloitte.com/us/en/insights/topics/business-strategy-growth/4q-2025-cfo-signals-survey.html
