What does DSO tell you?

Roughly how many days, on average, it takes to collect after a sale on credit. A DSO of 50 on 30-day terms means customers are paying about 20 days late on average.

One close to your payment terms. If you invoice on 30-day terms, a DSO near 30 means customers pay roughly on time. Comparing with your own trend and your terms is more useful than comparing with another company, whose terms and customers may differ.

Should I use total sales or credit sales?

Credit sales: cash sales are collected at once and would make DSO look better than it is. If the books don't separate them, total revenue is a common substitute; just use it consistently.

Can I calculate DSO for a month or a quarter?

Yes. Use credit sales for that period and the days in it: 30 or 31 for a month, 90 or 91 for a quarter. Short periods move more with seasonal sales, so compare like periods.

Free calculator

Days sales outstanding (DSO) calculator

Enter beginning and ending accounts receivable and credit sales for the period. You get days sales outstanding, receivables turnover and the average balance, with each formula shown.

Reviewed November 5, 2026. Runs in your browser; nothing you enter is sent anywhere.

Balance sheet and income statement

Beginning accounts receivable

Ending accounts receivable

Credit sales for the period

Sales on account. Use total revenue if credit sales aren't reported separately.

Days in the period

365 for a year, 90 or 91 for a quarter, 30 for a month.

DSO= $50,000 average receivables ÷ $365,000 credit sales × 365 days

The DSO formula

DSOAverage accounts receivable ÷ Credit sales × Days in the period

TurnoverReceivables turnover = Credit sales ÷ Average accounts receivable

With $40,000 of receivables at the start of the year, $60,000 at the end and $365,000 of credit sales, average receivables are $50,000. DSO is $50,000 ÷ $365,000 × 365 = 50 days, and receivables turn over 7.3 times a year.

Bringing DSO down

Invoice as soon as the work is done, with the terms and due date on the invoice.
Offer easy ways to pay, and follow up before and on the due date, not weeks later.
Review an aging report each month and act on the oldest balances first.

Software built to automate collections, reminders and cash application is compared in AR and collections software.

DSO: questions

What does DSO tell you?: Roughly how many days, on average, it takes to collect after a sale on credit. A DSO of 50 on 30-day terms means customers are paying about 20 days late on average.
What is a good DSO?: One close to your payment terms. If you invoice on 30-day terms, a DSO near 30 means customers pay roughly on time. Comparing with your own trend and your terms is more useful than comparing with another company, whose terms and customers may differ.
Should I use total sales or credit sales?: Credit sales: cash sales are collected at once and would make DSO look better than it is. If the books don't separate them, total revenue is a common substitute; just use it consistently.
Can I calculate DSO for a month or a quarter?: Yes. Use credit sales for that period and the days in it: 30 or 31 for a month, 90 or 91 for a quarter. Short periods move more with seasonal sales, so compare like periods.

More ratios

DSO is one leg of the cash conversion cycle, with days in inventory and days payables outstanding. The financial ratios cheat sheet has all three.

Balance sheet and income statement

The DSO formula

Bringing DSO down

DSO: questions

More ratios

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Reference tables

Templates

For accounting firms