Days Sales Outstanding Calculator

The Days Sales Outstanding Calculator shows the average number of days it takes your customers to pay you after a sale. You enter your accounts receivable, the total amount owed to you by customers at a point in time, your revenue for the period, and the number of days in that period, which is often 365 for a year or about 30 for a month. The tool divides accounts receivable by revenue, then multiplies by the period days, to give your days sales outstanding, often called debtor days or the average collection period. A lower figure means cash comes in quickly, which strengthens your liquidity and reduces the need for borrowing. A rising figure can be an early warning that customers are stretching payment, that credit control has slipped, or that a few large overdue accounts are dragging on the average. Owners, credit controllers, accountants and lenders use DSO to monitor collection performance and to compare it with the payment terms you actually offer. A few habits make the number more useful. Match the revenue and the period exactly, so use one month of revenue with about 30 days, not a full year, or the result will be misleading. Compare DSO against your stated terms, because a DSO well above your terms shows customers are paying late. Track it over several periods to see the trend rather than reacting to a single reading, and split out any one off large invoices that can distort a small business figure. Pair this with a wider cash conversion view so you understand collection alongside stock and supplier timing.

DSO = (accounts receivable / revenue) x days in the period. Estimate only, not financial or tax advice.