Days Sales Outstanding (DSO) Calculator
Calculate days sales outstanding — the average time to collect cash after a sale — from accounts receivable and revenue, with a benchmark read. Educational. Runs in your browser.
365 for a year, 90 for a quarter.
Around 45–60 days — somewhat slow; worth reviewing collections or credit terms.
Days sales outstanding = accounts receivable ÷ revenue × days in period. It estimates the average number of days it takes to collect cash after a sale. Lower is generally better — it means faster collection and less cash tied up in receivables. Always compare DSO to your payment terms (e.g. net-30) and to industry peers. Educational; everything runs in your browser.
About this tool
Days sales outstanding (DSO) measures how long, on average, it takes a business to collect payment after making a sale on credit. The formula is accounts receivable ÷ revenue × number of days in the period, which converts the receivables balance into a number of days' worth of sales. A DSO of 45, for example, means the company waits roughly 45 days between billing a customer and receiving the cash. DSO matters because receivables are sales the company has earned but not yet been paid for — money tied up in customers' hands rather than working in the business. A rising DSO can signal looser credit terms, slower-paying customers, or collection problems, all of which strain cash flow even when the income statement looks healthy. A falling DSO frees up cash. The right benchmark depends on the company's stated payment terms (a business selling on net-30 should see DSO somewhere near 30–45 days once normal payment lag is included) and on industry norms, since B2B firms with invoice terms naturally run higher DSO than cash-or-card retailers. DSO is most useful tracked as a trend and compared against direct peers rather than judged against a single absolute target. This is educational. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter the accounts receivable balance (money owed by customers).
- Enter revenue for the same period — credit sales if you have them, otherwise total revenue.
- Set the number of days in the period: 365 for a year, 90 for a quarter.
- Read the DSO and compare it to your payment terms and industry norms.
Frequently asked questions
- What is days sales outstanding?
- DSO is the average number of days it takes to collect cash after a credit sale: accounts receivable ÷ revenue × days in the period. A DSO of 40 means it takes about 40 days on average to get paid.
- What is a good DSO?
- It depends on payment terms and industry. A business selling on net-30 typically sees DSO in the 30–45 day range. Retailers paid instantly run very low DSO; B2B firms with invoice terms run higher. Compare to peers and to your own trend.
- Why does a high DSO matter?
- A high or rising DSO means more cash is tied up in receivables and collection is slowing. That can squeeze working capital and cash flow even if reported sales and profit look strong.
- Should I use total revenue or credit sales?
- Strictly, DSO uses credit sales, since cash sales are collected immediately. If you only have total revenue, using it gives a slightly conservative (lower) DSO. For credit-heavy B2B businesses the two are nearly the same.
- How do I calculate DSO for a quarter?
- Use the receivables and revenue for that quarter and set the days in period to about 90 (the number of days in the quarter). The formula scales automatically.
- Is anything uploaded?
- No. All calculations run entirely in your browser.