Days Sales Outstanding (DSO) Calculator
Works out how long, on average, customers take to pay.
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The formula
DSO = receivables ÷ credit sales × days in period
It expresses unpaid invoices as a number of days’ worth of credit sales. Lower means cash comes in sooner.
What to watch out for
Use credit sales only if you can. Including cash sales makes DSO look shorter than it is. Keep the sales and the days to the same period.
Frequently Asked Questions
How do I calculate DSO?
Divide receivables by credit sales and multiply by the days in the period. 110,000 ÷ 300,000 × 90 is 33.0 days.
What is a good DSO?
It depends on the industry and on the terms you give. The most useful comparison is with your own terms: at 30-day terms, a DSO of 33.0 days suggests customers pay about 3.0 days late on average.
How can DSO mislead?
It uses one balance at one date, so seasonal sales move it even when customers pay as usual. It is also an average, and can look fine while one large customer is well overdue.