Invoice Aging & DSO Calculator
Turn your outstanding receivables and sales into days sales outstanding, see how far it runs past your payment terms, and how many times a year you collect.
How it works
DSO = (accounts receivable ÷ credit sales) × period days · Days beyond terms = DSO − terms · Turnover = credit sales ÷ receivables
Days sales outstanding converts the cash trapped in unpaid invoices into an average number of days you wait to get paid. Multiplying the receivables-to-sales ratio by the period length gives that figure; subtracting your stated payment terms shows how far real collections drift past the promise on the invoice. A DSO that keeps climbing above terms is an early warning that either your collections process or your customers’ health is slipping.
Worked example
With $48,000 of receivables against $300,000 of annual credit sales, DSO is (48,000 ÷ 300,000) × 365 ≈ 58 days. On 30-day terms that is 28 days late, and receivables turn over about 6.3 times a year — a signal to tighten follow-up on overdue invoices.
Frequently asked questions
What is a good DSO?
It depends on your terms — the useful benchmark is DSO close to your payment terms. On net-30 terms a DSO in the 30s is healthy; consistently in the 50s or 60s means invoices are aging and cash is stuck.
How do I lower DSO?
Invoice immediately, state terms clearly, automate reminders before and after the due date, offer small early-payment discounts, and put chronic late payers on deposits or shorter terms.
Should I use total sales or credit sales?
Use credit sales — cash sales are collected instantly and dilute the measure. If you cannot separate them, total sales gives a rougher but still directional DSO.
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Educational estimate, not financial advice.