Accounts Receivable Days (DSO) Calculator
Calculate Days Sales Outstanding (DSO) to measure how quickly a company collects payments from its customers.
How to use this tool
- Enter accounts receivable, net credit sales and period in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your days sales outstanding (dso) and the full breakdown beneath it.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
DSO = (Accounts Receivable / Net Credit Sales) × Period Days
Equivalently: DSO = Accounts Receivable / Average Daily Sales
AR Turnover = Net Credit Sales / Accounts Receivable
How it works
Days Sales Outstanding (DSO) measures the average number of days a company takes to collect payment after a sale has been made. A lower DSO indicates faster collections and stronger cash flow management, while a higher DSO may signal collection difficulties or lenient credit terms. The calculation divides the ending accounts receivable balance by average daily credit sales for the chosen period.
Worked example
Company with $50,000 AR and $365,000 annual sales
- Accounts Receivable = $50,000
- Net Credit Sales = $365,000 over 365 days
- Average Daily Sales = $365,000 / 365 = $1,000 per day
- DSO = $50,000 / $1,000 = 50 days
- AR Turnover = $365,000 / $50,000 = 7.3x
DSO = 50 days — on average, customers pay within 50 days
Common mistakes to avoid
- Including cash sales in net credit sales, which understates DSO because cash sales carry no collection lag.
- Using end-of-period accounts receivable instead of an average, making DSO spike or drop with seasonal balance swings.
- Ignoring the period length: applying a 365-day divisor to quarterly data overstates DSO — use 90 or 91 days for quarterly figures.
Key terms
- Days Sales Outstanding (DSO)
- The average number of days it takes a company to collect payment following a credit sale; a key measure of liquidity and credit management efficiency.
- Accounts Receivable (AR)
- Money owed to a company by its customers for goods or services already delivered but not yet paid for.
- AR Turnover Ratio
- Net credit sales divided by accounts receivable; indicates how many times per period a company collects its average AR balance.
- Net Credit Sales
- Revenue from sales made on credit (excluding cash sales and net of returns/allowances); the denominator used in DSO.
- Cash Conversion Cycle
- A broader efficiency metric that includes DSO along with days inventory outstanding and days payable outstanding.
Frequently asked questions
- What is a good DSO for a B2B business?
- A DSO close to or slightly above your standard payment terms (e.g., 35-45 days for net-30 terms) is healthy. Significantly higher DSO signals collection problems.
- Should I use 360 or 365 days in the DSO formula?
- Most analysts use 365 days for annual comparisons. Some banks and credit analysts use 360. Be consistent and match the convention used in your industry benchmarks.
- How does DSO relate to AR turnover?
- DSO = Period Days / AR Turnover. A higher AR turnover means a lower DSO — you are collecting faster. They are two views of the same metric.