Days Sales Outstanding (DSO)
Average days to collect payment after a sale
FORMULA
DSO = (Accounts Receivable / Revenue) × 365
Alternate Calculations
Average Daily Revenue
Accounts Receivable / (Revenue / 365)What is Days Sales Outstanding?
Days Sales Outstanding measures the average number of days it takes a company to collect cash from credit sales. It indicates how efficiently a company manages accounts receivable and collects payments from customers. Lower DSO means faster cash collection and better working capital management.
Chart
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Sample Data
| month | ar | revenue | dso |
|---|---|---|---|
| Jan | 500,000 | 800,000 | 23 |
| Feb | 520,000 | 850,000 | 22 |
| Mar | 540,000 | 900,000 | 22 |
| Apr | 560,000 | 950,000 | 22 |
Required Data Columns
Accounts ReceivableDaily Revenue