AR Days Calculator — Days Sales Outstanding (DSO)
Find out how long your business takes to collect payment. Enter the accounts receivable balance, revenue for the period and the fraction sold on credit to get Days Sales Outstanding (DSO) and the AR turnover ratio.
Revenue period
%
Average number of days to collect payment after a credit sale
- 1
Daily credit sales
500,000 ÷ 365 = 1,369.86 - 2
AR Days (DSO)
85,000 ÷ 1,369.86 = 62.1
How does this calculator work?
DSO (AR Days) = AR ÷ (Annual Credit Sales ÷ 365). It shows the average collection lag in days. AR Turnover = Annual Credit Sales ÷ AR (higher is better). Compare DSO to your payment terms: the gap reveals how many days late customers pay on average. Use only credit sales — not total revenue — for the most accurate figure.
Formula
How this is calculated
Days Sales Outstanding (DSO) — also called the debtor collection period or AR days — measures the average number of days a business waits before receiving payment for a credit sale. A lower DSO means cash is collected quickly; a higher one signals slow-paying customers, aggressive credit terms or collections problems.
The formula first annualises the credit sales figure (if you enter quarterly or monthly revenue it is scaled up to 365 days). Daily credit sales = annual credit sales ÷ 365. DSO = AR balance ÷ daily credit sales. The AR turnover ratio is the inverse measure: how many times per year the entire receivables balance is collected. A turnover of 6 means the AR converts to cash about every 61 days (365 ÷ 6).
The "credit-sales %" field matters because DSO should ideally be calculated using only credit sales (cash transactions skip the AR process entirely). If you do not have a split, leave it at 100% to use total revenue — this will slightly inflate DSO for businesses with significant cash sales. Compare your DSO against your stated payment terms: a DSO of 45 days with net-30 terms suggests around 15 days of late payment on average.
Frequently asked questions
A good DSO depends on industry and payment terms. B2B businesses typically have DSO of 30–60 days. Retailers often have very low DSO (near zero for cash/card sales). A DSO consistently higher than your payment terms signals a collections problem. Benchmark against industry averages and your own historical trend.
Financial analysts often use average AR (beginning + ending balance ÷ 2) to smooth out seasonal swings and give a more representative turnover figure. If you have only one period-end balance, use it — the result still gives a useful snapshot of the current collections position.
Common tactics include: tighten credit terms (shorter payment windows, early-payment discounts), improve invoice accuracy (errors delay payment), automate reminders before due dates, offer multiple payment methods, and review credit limits for slow payers. Even small DSO reductions can significantly improve cash flow for businesses with large AR balances.
Also known as
TG we-Calculate Editorial Team. (2026). AR Days Calculator — Days Sales Outstanding (DSO) [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/ar-days-calculator
TG we-Calculate Editorial Team. "AR Days Calculator — Days Sales Outstanding (DSO)." TG we-Calculate. 2026. https://we-calculate.com/calculator/ar-days-calculator.
TG we-Calculate Editorial Team, "AR Days Calculator — Days Sales Outstanding (DSO)," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/ar-days-calculator
@misc{wecalculate_ar_days_calculator, title = {AR Days Calculator — Days Sales Outstanding (DSO)}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/ar-days-calculator}}, year = {2026}, note = {TG we-Calculate} }
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