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Easily calculate Days Sales Outstanding (DSO) with our user-friendly calculator. Track payments, improve cash flow, and boost your business efficiency.
When you sell goods or services on credit, you expect to get paid eventually. But how quickly does your business get paid? That’s where Days Sales Outstanding (DSO) comes in. DSO is a number that tells you the average time it takes for a company to collect money after a sale.
A high DSO means you’re waiting longer for payments. A lower DSO is better. It means you’re getting paid faster and have more cash flow to reinvest in your business.
But how do you know if your DSO is good? That’s where our Days Sales Outstanding Calculator comes in. It helps you figure out exactly how long it takes to collect your payments.
Calculating DSO is simple. The formula is:
DSO = (Accounts Receivable / Net Credit Sales) x Number of Days
Let’s break that down:
For example, let’s say:
Using the formula:
DSO = (50,000 / 200,000) * 30 = 7.5 days
This means it takes an average of 7.5 days for your company to collect payment after a sale. The lower the DSO, the better.
A high DSO can hurt your business. It means you’re not collecting payments quickly enough. That can lead to cash flow problems. You might not have enough cash to pay bills, buy more inventory, or invest in growth.
On the other hand, a low DSO means you’re getting paid faster. That gives you more flexibility and power to grow your business. In fact, businesses with lower DSO are often seen as more efficient and financially stable.
Using the Days Sales Outstanding Calculator is simple and quick. Here’s how:
Step 1: Enter Your Accounts Receivable
This is the total amount your customers owe you. Input the figure into the calculator.
Step 2: Enter Your Net Credit Sales
Add the total sales you’ve made on credit during the time period you're measuring.
Step 3: Choose the Time Period
Select how long you want to calculate your DSO for. This can be 30 days, 90 days, or 365 days (for a year).
Step 4: Calculate and Review
Hit the "Calculate" button. The calculator will tell you your DSO. From there, you can see how quickly you’re collecting payments and identify areas for improvement.
While DSO is all about how quickly you collect money, there are other important metrics to track, like Days Payable Outstanding (DPO) and Days Inventory Outstanding (DIO).
Together, DSO, DPO, and DIO help you understand your company’s financial health and cash flow.
Sometimes, it’s better to look at a longer time period. That’s where the Rolling 12-Month DSO comes in. Instead of just looking at one month, you can look at your DSO over the past 12 months. This gives you a clearer picture of how your collections are performing.
To calculate the Rolling 12-Month DSO:
A “good” DSO varies by industry, but as a rule of thumb:
Our DSO Calculator is simple, fast, and accurate. By calculating DSO, you get valuable insights into your business's payment cycle. The sooner you get paid, the better your cash flow will be. And better cash flow means more money to grow your business.
In Excel, the DSO formula is the same. Just input the accounts receivable and net credit sales into cells and use the formula = (Accounts Receivable / Credit Sales) * Number of Days.
A good DSO ratio is typically 15-30 days. Anything higher might indicate issues with collections or delayed payments.
To reduce your DSO, you can:
You can track your DSO using our calculator, or by monitoring your accounts receivable regularly. Looking at a rolling 12-month DSO can help spot trends.