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DSO calculator — the days sales outstanding formula, your number, and what a few fewer days would release.
Enter three figures. Nothing is stored or sent.
Your DSO
—
days sales outstanding
Cash released by 10 fewer days
—
working capital that stops being funded from borrowings or reserves
The DSO formula
DSO = ( accounts receivable ÷ credit sales in the period ) × days in the period
Receivables are the closing balance owed to you by customers. Credit sales are sales made on credit in the same period — exclude cash sales, or the number flatters you. Days in the period are 365 for a year, 90 or 91 for a quarter, 30 or 31 for a month.
Cash released by reducing DSO is the daily credit sales multiplied by the days removed: every day of DSO you remove is one day of sales that turns into cash instead of sitting in debtors.
What the number hides
DSO is an average. A book with most customers paying at 40 days and a few large accounts at 180 can show a DSO of 60 and look healthy. The ageing behind the number — who is late, how late, and whether anyone owns it — is what the DSO Reduction Programme starts with.
The DSO Reduction ProgrammeQuestions about DSO
What is the DSO formula?
Days sales outstanding = (accounts receivable ÷ credit sales in the period) × number of days in the period. Using a year: receivables divided by annual credit sales, multiplied by 365. Using a quarter: divided by quarterly credit sales, multiplied by 90 or 91.
What is a good DSO?
It depends on your credit terms. A useful test is DSO against the terms you actually give: if you offer 45 days and your DSO is 72, your customers are taking almost four extra weeks of interest-free credit on average. Compare against your own terms and your own history before comparing against anyone else's benchmark.
How is DSO different from the average collection period?
They are the same idea. Average collection period, debtor days and DSO all measure how long, on average, it takes to turn a credit sale into cash.
How do you reduce DSO?
By fixing ownership and consequence: someone whose only job is collection, promises recorded with dates, disputes with named owners, proof of delivery that cannot be argued with, and a cost to the customer for being overdue. That is what the DSO Reduction Programme installs.
Discuss reducing your DSO
Tell us where you are on the curve. A practitioner — not a sales desk — reads every enquiry and replies within one working day.