Days Sales Outstanding (DSO) Calculator

DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days. It measures the average number of days it takes a business to collect payment after a credit sale — for example, $150,000 in AR against $1.2 million in annual credit sales gives a DSO of about 45.6 days.

It depends heavily on your industry and standard payment terms — a business with 30-day payment terms would generally want a DSO well under 45-60 days, while industries with longer standard terms (60-90 days) naturally have higher DSO. Compare your DSO to your own typical payment terms and to industry peers, not to a universal number.

Generally yes — a lower DSO means you're collecting cash faster, improving cash flow. But an extremely low DSO relative to your stated payment terms could also suggest overly restrictive credit terms that limit sales growth, so it's a balance.

Use credit sales only (sales made on account, not paid immediately in cash) — including cash sales in the denominator would understate DSO, since cash sales create no receivable and no collection period.

Compare your calculated DSO to your stated payment terms (e.g., Net 30, Net 60). If your DSO is meaningfully higher than your terms, customers are effectively paying late on average — enter your payment terms below to see the gap directly.