DSO Calculator
This free calculator computes days sales outstanding (DSO) from accounts receivable and total credit sales, and compares it to your average payment terms. Enter accounts receivable, total credit sales for the period, the days in the period, and your net terms.
How DSO is calculated
Days sales outstanding divides accounts receivable by total credit sales for the period, then multiplies by the days in that period. For example, 500,000 dollars of AR on 3,000,000 dollars of annual credit sales is about 61 days. Read against your terms, it shows whether customers pay on time or well past due.
What is a good DSO
It depends on the industry and terms. The useful benchmark is DSO relative to your net terms: a DSO close to terms means customers pay roughly on time, while a DSO well above terms signals slow collection and dilution risk. The calculator shows the gap between your DSO and your stated terms.
Why it matters to a lender
For a factor or asset-based lender, DSO is a core indicator of receivables quality and liquidity. A rising or erratic DSO argues for a lower advance rate and tighter monitoring. Zolvo monitors aging, DSO, and dilution through portfolio monitoring and automates the collections that bring DSO down, see accounts receivable financing.
Frequently asked questions
What is days sales outstanding?
DSO is the average number of days a business takes to collect payment after a credit sale, calculated as accounts receivable divided by total credit sales, times the days in the period. A lower DSO means faster collection.
How do you calculate DSO?
Divide accounts receivable by total credit sales for the period, then multiply by the number of days in that period.
What is a good DSO?
It depends on industry and terms; the key benchmark is DSO versus your net terms. A DSO well above terms signals slow collection and dilution risk.
Why does DSO matter to a lender?
It measures receivables quality and liquidity. A rising or erratic DSO means slower, less predictable collections, which argues for a lower advance rate and tighter monitoring.