Free AR resources / tool
Days sales outstanding shows approximately how long it takes to collect payment after a credit sale. Use your receivables balance and credit sales over a matching period to see where your cash is tied up.
The standard calculation is DSO = (accounts receivable ÷ credit sales) × number of days in the period.
For example, $42,000 in receivables and $180,000 in credit sales over 90 days produces 21 days DSO. A lower result generally means cash is arriving sooner, though industry payment terms and seasonality matter.
DSO can help an accounts receivable team spot slower collections, changing customer behaviour or an ineffective reminder process.
Track it consistently over time. A single number is less useful than the direction of travel, and DSO calculated from end-of-period receivables is only an estimate.
There is no universal target. Compare your DSO with your contractual payment terms, industry norms and historical results.
Use credit sales for the period. Cash sales do not create accounts receivable and can distort the result.
Yes. DSO can exceed the period length when outstanding receivables are large relative to credit sales.
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