DSO Calculator
Calculate days sales outstanding from accounts receivable and credit sales, and see how far your collection period runs beyond your payment 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. Read against your average payment terms, it shows whether customers pay on time or well past due. A rising DSO ties up working capital and raises dilution risk.
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Frequently asked questions
What is days sales outstanding (DSO)?
DSO is the average number of days a business takes to collect payment after a credit sale. It is calculated as accounts receivable divided by total credit sales, multiplied by the number of days in the period. A lower DSO means faster collection and stronger working capital.
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. For example, $500,000 of AR on $3,000,000 of annual credit sales is (500,000 / 3,000,000) x 365, or about 61 days.
What is a good DSO?
It depends on the industry and your payment terms. A useful benchmark is your DSO relative to your average terms: a DSO close to your net terms means customers pay roughly on time, while a DSO well above terms signals slow collection and dilution risk. This calculator shows the gap between your DSO and your stated terms.
Why does DSO matter 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 means slower, less predictable collections, which argues for a lower advance rate and tighter monitoring. Lenders track DSO trends, not just the point-in-time value.
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