DSO calculator
Days sales outstanding from your own four numbers — plus the floor your payment terms put under it, and the gap in between, which is the only part a collections process can actually move.
No account, no email wall. The calculator runs entirely in your browser — the figures you type never leave it.
DSO
31.5 days
On average you wait 31.5 days from invoicing to being paid. Every day of that is a day you have funded your customer's operations out of your own account.
Best possible DSO
23.3 days
If every customer paid exactly on their due date and nobody was late, you would still report 23.3 days. That floor is your payment terms, not your collections — the only way below it is to sell on shorter terms or get paid up front.
The gap
8.2 days
8.2 days of the wait is lateness rather than terms — the part a collections process can actually move. At $13,333.33 of invoicing a day, closing it would put $109,333.31 back in your account and keep it there.
| Step | Arithmetic | Result |
|---|---|---|
| A day's credit sales | $1,200,000 ÷ 90 days | $13,333.33 a day |
| DSO | $420,000 ÷ $1,200,000 × 90 days | 31.5 days |
| Best possible DSO | $310,000 not yet due ÷ $1,200,000 × 90 days | 23.3 days |
| The gap | 31.5 days − 23.3 days | 8.2 days |
| Cash in the gap | $13,333.33 a day × 8.2 days | $109,333.31 |
Where the balance sits
$310,000 of your $420,000 is inside its terms and behaving exactly as it should. $110,000 is past due — that is the part with a reason behind it, and the reason is usually written down in a reply someone sent you.
The three formulas, in full
- DSO
- receivables ÷ credit sales × days in period
- Best possible DSO
- receivables not yet past due ÷ credit sales × days in period
- The gap
- DSO − best possible DSO
There is no benchmark on this page and there is not going to be one. A target DSO without the payment terms behind it says nothing: 45 days is excellent on net 45 and poor on net 15. The two comparisons worth making are against your own best possible DSO and against your own number last quarter, and both come out of your own books.
To put a cost on the wait rather than a length, the late payment calculator does that, and the late fee calculator works out what one overdue invoice has accrued.
Questions people ask about DSO
- What is DSO?
- Days sales outstanding: the average number of days between invoicing a customer and being paid. Take your accounts receivable at the end of a period, divide by the credit sales in that period, and multiply by the number of days in it. It is the single clearest measure of how long your own money spends in somebody else's account, and it moves for two quite different reasons — the terms you sell on, and how late people are against those terms.
- How do I calculate DSO?
- DSO = (accounts receivable ÷ credit sales) × days in the period. Use the same period for all three: end-of-quarter receivables with a quarter of sales and 90 days. Exclude cash and card sales collected at the point of sale — they were never receivable, and including them drags the number down in a way that flatters you and tells you nothing. If you want a figure that is not distorted by one unusual month, a quarter or a year is a steadier period than a month.
- What is best possible DSO?
- The DSO you would report if every customer paid exactly on their due date and nobody was late at all. It is the same formula with only the not-yet-past-due part of your receivables on top. It is never zero, and that is the useful part: if you sell on net 30, you cannot get below roughly a month however good your collections are. Best possible DSO is the floor your terms put under the number.
- What does the gap between DSO and best possible DSO tell me?
- It separates the part of the wait you chose from the part you did not. Best possible DSO is the terms you sell on. The gap on top of it is lateness — customers past their due date — and it is the only one of the two that a collections process can move. If your DSO is 52 days and your best possible DSO is 44, the collections problem is 8 days, not 52. Multiplying that gap by a day's credit sales gives you the cash sitting in it, which is the version of this number a bank or a board actually reacts to.
- What is a good DSO?
- We are not going to quote you a benchmark, because a figure without the terms behind it is meaningless — 45 days is excellent on net 45 and poor on net 15. The comparison that matters is against your own best possible DSO, which this calculator gives you, and against your own number last quarter. Both come from your own books, and unlike an industry average, both are things you can actually act on.
- Why is my DSO longer than the period I measured?
- Because your outstanding balance is larger than the sales in that period, which usually means the period is too short or the sales in it were unusually low. A month that contained a holiday shutdown will do it. The arithmetic is still correct, but a number produced that way is not comparable to the one before it — run it over a quarter or a year instead. The calculator says so on screen rather than quietly handing you a figure that looks like a crisis.
- Should DSO include cash sales?
- No. Only credit sales — the invoices you had to wait for. Cash and card sales collected on the spot were never outstanding for a single day, so including them makes the average look shorter without anything having improved. It is the most common way this metric gets quietly overstated, usually because the sales figure was taken straight off a profit and loss statement rather than from the invoiced total.
- Do I need an account to use this?
- No. There is no signup, no email wall and no trial. The calculation runs in the page you are on — the figures you type are not sent anywhere, because the calculator makes no server call at all. The email box further down the page is the one exception, and only if you choose to fill it in.
Collectly does this across every invoice, on its own
You just measured how long your money spends elsewhere. Collectly does the same thing continuously for every unpaid invoice you have — reads the replies, works out why each one is unpaid, estimates when it will land, and drafts the follow-up for you to approve.
With 15 rules it cannot talk its way around
- A paid or written-off invoice is never chased again. Follow-ups are switched off permanently, not deferred.
- A disputed invoice stops automated chasing entirely and goes to a person to resolve.
- A promise to pay on a date pauses reminders until that date has passed. Collectly checks back the day after, not on the day.
- At least three days between reminders on the same invoice, so re-running the analysis cannot turn into nagging. A resent or corrected invoice the customer has just asked for is not a reminder, and still waits for your approval.
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