Days Sales Outstanding (DSO) measures how long your customers take to pay their invoices, on average. It’s an important metric because it provides a general gauge of your collections performance. An increasing DSO may indicate collection delays and potential cash flow problems.
Formula: DSO = Average Accounts Receivable ÷ Total Credit Sales × Number of Days in Period
How to use the calculator
Enter the following information to calculate your DSO:
- Total Credit Sales: The total amount of sales on terms for the period.
- Average A/R: Add accounts receivable 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 | $ |
| Average A/R | $ |
| Number of Days in Period | |
| DSO | 26.8 days |
Many companies consider a DSO below 45 days to be good. A DSO 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.