A new study by The Kaplan Group, a commercial collection agency, examines subscription saas companies are doing on collection against accounts receivables from 2020 to 2024, revealing significant shifts in payment patterns and operational efficiency.
The software as a service industry’s financial health can be effectively gauged through its payment collection efficiency, particularly through metrics such as Days Sales Outstanding (DSO) and Accounts Receivable to Revenue ratios.
Key Takeaways
- Enterprise-focused companies like Salesforce, Workday, and Atlassian have Days Sales Outstanding, with Salesforce ranking first at 132.9 days in 2024.
- The average DSO decreased from 58.70 days in 2020 to 54.03 days in 2024, marking a reduction of 4.67 days. This improvement is largely driven by Salesforce, which reduced its DSO by approximately 37 days over the period.
- The AR-to-Revenue ratio varies significantly across companies, with Salesforce at 36.41% and Dropbox at just 2.75% in 2024.
Industry-Wide Efficiency Improvements
The sector has demonstrated meaningful progress in payment collection efficiency. The industry-wide average DSO has decreased from 58.70 days in 2020 to 54.03 days in 2024, representing a compound annual decline of 2.17%. This improvement suggests a broader trend toward more efficient working capital management across the industry. Salesforce has been particularly successful in this regard, reducing its DSO by approximately 37 days over the study period, though it still maintains the highest DSO among peers.
The study reveals interesting developments among emerging players. Atlassian’s DSO has more than doubled during the study period, reaching 52.6 days by 2024. In contrast, companies like HubSpot, Twilio, and Zoom have maintained DSO levels below 50 days.
The enterprise software industry’s payment collection dynamics reflect both strategic choices and market positioning. While the overall trend shows improving efficiency, the persistent gap between enterprise-focused and broader-market vendors suggests that payment terms remain a strategic tool in enterprise software sales.
Market Segmentation
The industry shows clear stratification in payment collection practices. The average AR-to-Revenue ratio stands at 14.80%, with significant variation across companies. Salesforce maintains the highest AR-to-Revenue ratio at 36.41%, while companies like Dropbox and Intuit operate with much lower ratios, at 2.75% and 3.29% respectively, reflecting their more standardized, subscription-based revenue models.
As of 2024, Salesforce is ranking number one with a DSO of 132.9 days, followed by Workday at 82.4 days, and Atlassian at 52.6 days. This pattern reflects the complex procurement processes and negotiating power of large enterprise customers.
Methodology
The analysis encompasses the SEC Fillings data from eight leading software companies, including enterprise-focused vendors like Salesforce and Workday, as well as companies targeting broader market segments such as Zoom and Intuit. The study period spans from 2020 to 2024, tracking DSO trends and AR-to-Revenue ratios. DSO calculations were standardized across companies to ensure comparative validity, computed as (Accounts Receivable / Revenue) × 365 days. The research incorporates both quantitative trend analysis and qualitative assessment of company-specific factors influencing payment terms.
