DSO Calculator (Days Sales Outstanding)
Work out how many days, on average, it takes to collect a sale, how far that is beyond your payment terms, and how much cash is tied up with customers. Free, no signup, nothing leaves your browser.
Full guide: The DSO formula, the countback method and how to lower it →
Late payers every month?
A free Make scenario can send the right reminder at 7, 14 and 30 days overdue, and a monthly statement to every customer, without anyone remembering.
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The DSO formula
DSO = accounts receivable ÷ credit sales for the period × days in the period. Use the same period for both numbers: a month (30 days), a quarter (90) or a year (365). Some businesses use average receivables for the period instead of the closing figure; either is fine if you are consistent.
Worked example: customers owe S$120,000 at the end of a quarter in which credit sales were S$240,000. DSO = 120,000 ÷ 240,000 × 90 = 45 days. On 30-day terms, customers are paying 15 days late on average. Daily credit sales are S$2,666.67, so about S$40,000 of cash is tied up beyond your terms.
What is a good DSO?
One close to your own payment terms. A business on 60-day terms with a DSO of 65 is collecting well; a business on 14-day terms with a DSO of 45 has a problem. Compare with yourself month by month rather than with an industry average.
How to bring DSO down
- Invoice the day you deliver, not at month-end.
- Put the due date and payment details on every invoice.
- Send a courtesy reminder before the due date and staged reminders after it.
- Send statements to every customer each month.
- Call the customers in the over-60 column.
The free AR aging report shows exactly which customers are holding DSO up, from your Xero or QuickBooks export.
Questions
How do you calculate days sales outstanding? Divide accounts receivable by credit sales for the period and multiply by the number of days in the period. S$120,000 owed on S$240,000 of quarterly sales is 45 days.
Should I include cash sales? No. Use credit sales only, because cash sales never become receivables. Including them makes DSO look better than it is.
Should receivables include GST? Receivables usually include GST while sales figures often exclude it, which overstates DSO by about the GST rate. Use both figures with GST or both without.
More free calculators: break-even, gross profit, price increase, DSO, GST, invoice due date and all free tools.
