See how many days it takes on average to collect payment after a credit sale. Enter accounts receivable at the start and end of the period and your credit sales to get DSO, the receivables turnover ratio and the average collection period, and compare them with your payment terms.
Last updated:
$
Optional. Leave empty to use ending AR.
$
$
Net of returns and allowances.
365 for a year (some use 360), 90 for a quarter, 30 for a month.
days
e.g. 30 for net 30.
Enter your values to see the result.
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How to use the Days Sales Outstanding Calculator
Enter accounts receivable at the beginning and end of the period (beginning is optional).
Enter credit sales for the same period. Use total revenue if almost all sales are on credit.
Set the number of days in the period: 365 for a year, 90 for a quarter, 30 for a month.
Optionally add your payment terms to see how far collections lag behind them.
Read DSO, the receivables turnover and the cash that faster collection would release.
Days sales outstanding formula
DSO = Average accounts receivable ÷ Credit sales × Days in period
Average accounts receivable = (Beginning AR + Ending AR) ÷ 2
Receivables turnover = Credit sales ÷ Average accounts receivable
Average collection period = Days in period ÷ Receivables turnover (the same value as DSO)
Example: receivables of $90,000 at the start of the year and $110,000 at the end average $100,000. With $1,200,000 of credit sales, DSO = 100,000 ÷ 1,200,000 × 365 = 30.4 days and the receivables turnover is 12× a year.
Turnover and DSO at a glance (365-day year)
Receivables turnover
DSO (days)
Typical terms it matches
24×
15.2
Net 15 or faster
12×
30.4
Net 30
8×
45.6
Net 45
6×
60.8
Net 60
4×
91.3
Net 90
Reading DSO correctly
DSO is an average, so a few very late invoices can hide behind many prompt payers. Pair it with an accounts receivable aging report (current, 1-30, 31-60, 61-90, 90+ days overdue). Seasonal businesses should compare the same period across years or use monthly DSO, because a big sales month at period end inflates receivables and DSO.
Frequently asked questions
What is the DSO formula?
Days sales outstanding = average accounts receivable ÷ credit sales × number of days in the period. Average receivables = (beginning AR + ending AR) ÷ 2. For a quick estimate many people use ending AR instead of the average.
How are DSO and receivables turnover related?
Receivables turnover = credit sales ÷ average accounts receivable, the number of times receivables are collected per period. The average collection period = days in the period ÷ turnover, which is the same number as DSO.
What is a good DSO?
A good DSO is close to your payment terms. If you invoice on net 30 terms, a DSO around 30 to 40 days means most customers pay roughly on time; a DSO far above your terms points to slow payers or collection problems. Typical levels vary a lot by industry.
Should I use total sales or credit sales?
Credit sales are more accurate, because cash sales are collected immediately and never become receivables. Including cash sales makes DSO look lower than it really is. If nearly all your sales are on account, total revenue is a reasonable substitute.
How do I lower DSO?
Invoice promptly and accurately, offer electronic payment, send reminders before and after the due date, consider early-payment discounts, check credit before extending terms and follow up on overdue accounts consistently.
How much cash does a lower DSO free up?
Each day of DSO ties up about one day of credit sales. With $1.2 million of annual credit sales, one day is about $3,288, so cutting DSO by 10 days would release roughly $32,900 of cash.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.