As the sun stays out longer and offices start to feel a little emptier, many credit professionals notice a familiar and unwelcome trend: Days Sales Outstanding (DSO) begins to climb. While the summer season brings vacations, barbecues, and long weekends, it also brings delays, especially in the world of receivables. The late-summer slowdown is more than just a scheduling nuisance; it’s a recurring business risk that can disrupt cash flow, stretch working capital, and frustrate collection teams. Recognizing the patterns behind this seasonal trend can help credit departments act early and mitigate its effects.
One of the primary drivers of rising DSO in the summer is personnel availability, or lack thereof. Key decision-makers at customer companies, including AP managers, CFOs, and purchasing agents, often stagger their vacations between July and August. Even when a customer intends to pay on time, a missing signature or internal bottleneck can delay disbursement by a week or more. These absences also disrupt normal follow-up cycles, especially when contact points are unclear or there’s no backup in place. A smooth process in the spring can become sluggish in the heat of summer, with payment approvals stuck in limbo.
Another factor is seasonality in the customer’s business operations. Many companies, particularly in sectors like manufacturing, construction, or agriculture, slow down operations in late summer. When production lags, revenue declines, and so does liquidity. Customers may start to stretch payables to conserve cash, especially if they’re bracing for large Q4 investments or budgeting for year-end capital expenses. Even stable customers might deprioritize your invoice in favor of more strategic supplier relationships during leaner summer months. For small to midsized suppliers, this can result in a widening DSO gap, especially if no action is taken early.
Internal issues at your own company can also compound the problem. Understaffed credit and collections teams may not follow up with the same frequency or urgency during July and August, particularly when their own departments are running with a skeleton crew. If follow-up is delayed even by a few days, the likelihood of slipping into another billing cycle increases. Likewise, if invoice errors or disputes arise, resolution often takes longer when both sides of the transaction are missing key personnel. In the end, a small hiccup in July can lead to a payment delay that bleeds well into September.
So, what can credit managers do to minimize the late-summer impact on DSO?
First, plan proactively. Begin reviewing customer aging and high-balance accounts and escalate outreach to at-risk customers before the vacation season peaks. Encourage customers to pre-schedule payments or provide early remittance if key personnel will be unavailable. Second, tighten up your own internal response times and ensure invoices are sent without delay, disputes are logged and addressed quickly, and follow-up intervals remain consistent. If your staff is taking time off, cross-train others to step in temporarily so momentum doesn’t stall.
Additionally, now’s a smart time to revisit credit terms and collections strategy. If certain customers consistently pay late every summer, consider temporary term adjustments or incentive-based early payment programs to encourage better behavior. Alternatively, for especially volatile customers, this may be a good window to assess whether credit limits are still appropriate or whether a more aggressive collections posture is warranted. Data from past summers can help forecast where pressure will likely emerge and guide your prioritization before it’s too late.
In the end, the summer DSO bump is one of the most predictable credit risks you’ll face all year. That also makes it one of the most manageable, if you’re looking ahead. Don’t wait until August to find yourself short on cash and short on answers. With a few targeted actions and strong internal alignment, you can turn this seasonal squeeze into a non-event and keep your A/R in the present, even when everything else seems to be on vacation.
Your thoughts and comments (nseiverd@cmiweb.com) are most welcome!
Nancy Seiverd, President
CMI Credit Mediators, Inc.
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