Debtor days, also known as days sales outstanding (DSO), measures how long your customers take to pay their invoices, on average. It is an important metric because it provides a general gauge of your collections performance. An increase in debtor days may indicate collection delays and potential cash flow issues.
Formula: Debtor Days = Average Trade Debtors ÷ Total Credit Sales × Number of Days in Period
How to use the calculator
Enter the following information to calculate your debtor days:
- Total Credit Sales: The total amount of sales made on credit terms during the period.
- Average A/R (Trade Debtors): Add trade debtors at the beginning and end of the period, then divide by two.
- Number of Days in the Period: Typically a month, quarter, or year.
| Total Credit Sales | A$ |
| Average A/R | A$ |
| Number of Days in Period | |
| Debtor Days | 26.8 days |
Many companies consider debtor days below 45 days to be good. Debtor days of 90 days or more may indicate collection problems and can negatively affect your cash conversion cycle.
Note: This calculator is for educational purposes only and not intended as financial advice. Please consult a professional if you require financial advice.
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Marco Terry is the Managing Director of Commercial Capital LLC and has over two decades of experience in asset-based finance. He has worked with small and mid-sized companies across the United States, Canada, and Australia. Marco holds a Master of Science in Finance.