Days Sales Outstanding (DSO) Calculator
Find the average days to collect receivables.
Default 365
Results update as you type.
How it works
Days sales outstanding, or DSO, tells you how long it takes on average to collect money owed by customers, and this calculator finds it. You enter your accounts receivable, the revenue earned on credit during a period, and the number of days in that period, and it returns the DSO. The calculation divides receivables by revenue and multiplies by the period length, typically a year of 365 days or a quarter of about 90. DSO is a key measure of how efficiently a company collects payments and manages its cash flow. A lower DSO means customers pay quickly, freeing up cash the business can use, while a high DSO means money is tied up in unpaid invoices, straining liquidity and increasing the risk of bad debt. What counts as good varies by industry and credit terms; a DSO close to your standard payment terms, such as net 30, indicates healthy collection, while a DSO well above your terms signals collection problems. Tracking DSO over time reveals trends: a rising DSO warns that collections are slowing, perhaps due to lax credit policies, customer financial trouble, or billing issues, prompting action. Businesses reduce DSO by invoicing promptly, offering early-payment discounts, tightening credit terms, and following up on overdue accounts. This is a core metric in accounts receivable and working capital management. Enter your receivables, revenue, and period to find your DSO.
DSO = (accounts receivable / revenue) × days in period
Days sales outstanding measures the average number of days it takes to collect payment after a sale. It divides accounts receivable by the revenue for the period and multiplies by the number of days in that period. A lower DSO means faster collection and better cash flow.
Source:Financial ratios
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Worked example
How to use this calculator
- 1
Enter your values
Enter accounts receivable and total credit revenue.
- 2
Adjust the options
Adjust period length if they apply — sensible defaults are already set.
- 3
Read your result
Days sales outstanding updates instantly as you type — no button to press.
Frequently asked questions
What is days sales outstanding?
Days sales outstanding, or DSO, is the average number of days it takes a company to collect payment after making a sale on credit. It is calculated by dividing accounts receivable by revenue for a period and multiplying by the days in that period. DSO measures collection efficiency and its impact on cash flow.
What is a good DSO?
A good DSO depends on your industry and your credit terms. Generally, a DSO at or below your standard payment terms, such as 30 days for net-30 invoicing, indicates healthy collection. A DSO significantly higher than your terms suggests customers are paying late and collections need attention. Comparing to industry benchmarks provides context.
Why does DSO matter?
DSO directly affects cash flow. A high DSO means cash is locked up in unpaid invoices rather than available for operations, payroll, or growth, and it raises the risk of bad debt. A low DSO means faster collection and healthier liquidity. Managing DSO is central to working capital and financial stability.
How can I lower my DSO?
Invoice promptly and accurately, make payment easy, offer discounts for early payment, tighten credit terms for slow payers, and follow up systematically on overdue accounts. Regularly reviewing aging receivables and enforcing collection policies keeps DSO in check. Reducing DSO frees cash and reduces the chance that receivables become uncollectible.
Should I use total revenue or credit sales?
Ideally use credit sales, the revenue actually sold on account, since cash sales are collected immediately and do not create receivables. Using total revenue when much of it is cash would understate DSO. If most of your sales are on credit, total revenue is a reasonable approximation, but credit sales give the most accurate figure.