📊 DSO Calculator
Calculate Days Sales Outstanding (DSO)
Period for revenue calculation (typically 365 for annual, 90 for quarterly)
How to Use This Calculator
Enter Accounts Receivable
Input the accounts receivable balance - the amount of money owed by customers for credit sales.
Enter Total Revenue
Enter the total revenue for the period - total sales or revenue for the same period used for accounts receivable.
Enter Number of Days
Enter the number of days for the period (typically 365 for annual, 90 for quarterly, 30 for monthly).
Review DSO
See the days sales outstanding (DSO) - the average number of days it takes to collect receivables. Lower DSO is generally better, indicating faster collection.
Formula
DSO = (Accounts Receivable / Total Revenue) × Number of Days
Average Daily Sales = Total Revenue / Number of Days
Example Calculation:
If accounts receivable $50,000, revenue $500,000, days 365:
• DSO = ($50,000 / $500,000) × 365 = 36.5 days
• This means it takes about 37 days on average to collect receivables
About DSO Calculator
A DSO (Days Sales Outstanding) calculator helps you calculate the average number of days it takes to collect receivables from customers. DSO is calculated as (Accounts Receivable / Total Revenue) × Number of Days. Lower DSO is generally better, as it indicates faster collection of receivables and better cash flow. DSO is an important metric for assessing receivables management, cash flow, and working capital efficiency. It helps you understand how long it takes to convert credit sales into cash.
When to Use This Calculator
- Receivables Management: Assess receivables collection efficiency
- Cash Flow Analysis: Analyze cash flow from receivables
- Working Capital Management: Evaluate working capital efficiency
- Financial Analysis: Assess receivables management
Understanding DSO
- Lower DSO: Faster collection (generally better)
- Higher DSO: Slower collection (may indicate issues)
- Industry Standards: DSO varies by industry
- Trend Analysis: Monitor DSO trends over time
Why Use Our Calculator?
- ✅ DSO Calculation: Calculate DSO accurately
- ✅ Receivables Management: Assess collection efficiency
- ✅ Cash Flow Analysis: Analyze cash flow from receivables
- ✅ Working Capital: Evaluate working capital efficiency
- ✅ 100% Free: No registration or payment required
Frequently Asked Questions
What is DSO (Days Sales Outstanding)?
DSO (Days Sales Outstanding) measures the average number of days it takes to collect receivables from customers. It's calculated as (Accounts Receivable / Total Revenue) × Number of Days. Lower DSO is generally better, as it indicates faster collection of receivables and better cash flow. DSO is an important metric for assessing receivables management, cash flow, and working capital efficiency.
What's a good DSO?
A lower DSO is generally better, as it indicates faster collection. However, the "good" DSO depends on the industry, payment terms, and business model. Generally, DSO under 30 days is excellent, 30-45 days is good, and over 45 days may need improvement. Compare to industry benchmarks, payment terms (e.g., net 30), and historical trends. DSO should align with your payment terms.
How do I reduce DSO?
To reduce DSO: (1) Improve invoicing - send invoices promptly and accurately, (2) Offer early payment discounts - incentivize faster payment, (3) Improve collections - follow up on overdue accounts, (4) Set clear payment terms - establish and communicate payment terms, (5) Credit management - assess customer creditworthiness, (6) Use automated reminders - send payment reminders. The goal is to collect receivables faster.
Why is DSO important?
DSO is important because it measures receivables collection efficiency and cash flow. It helps: (1) Assess receivables management - how efficiently you collect receivables, (2) Analyze cash flow - understand cash flow from receivables, (3) Evaluate working capital - assess working capital efficiency, (4) Identify issues - detect collection problems early. Lower DSO improves cash flow, reduces working capital needs, and improves financial health.