Days Sales Outstanding Calculator

Revenue recognised, cash not received.

Revenue recognised, cash not received. Collections rarely get management attention because the revenue is already recognised.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Average receivables

Annual credit revenue

Target collection period

Bad debt rate

Cost of capital

Days sales outstanding

30 days

$55 released at 30 days

Receivables$28,000

Annual carrying cost$3,360

Annual bad debt$5,100

Cash released by hitting target$55

Every day of DSO ties up $932. Collections rarely get management attention because the revenue is already recognised: but the cash is not, and the carrying cost of $3,360 a year is real money.

How the Days Sales Outstanding Calculator works

Collections rarely get management attention because the revenue is already recognised. The cash is not, and the carrying cost of financing those receivables is real money that appears nowhere on the profit and loss.

Also known as: DSO calculator · how long to get paid · receivables days calculator

How long the money takes to arrive

Days sales outstanding is accounts receivable divided by revenue, times days in the period. It measures how long customers take to pay after being invoiced.

For a card-paying direct-to-consumer seller it is close to zero, since settlement runs two to five days. The metric matters for anyone with trade accounts, wholesale customers or invoiced business.

It also matters more than most sellers realise for marketplace business. Amazon and several others settle on a schedule rather than per transaction, and a fourteen-day settlement cycle is fourteen days of receivables whether or not anyone thinks of it that way.

The reserve nobody counts as receivables

Payment processors holding a rolling reserve are holding your receivables, and the amount is frequently substantial. A 10% reserve held for 180 days on £80,000 monthly volume is £48,000 permanently outstanding.

It does not usually appear in the receivables figure because it does not look like a debtor. It is money earned, not received, held by a third party against future risk, which is the definition of a receivable.

Including it in the days sales outstanding calculation gives a truer picture of how much cash the business has tied up in money it has already earned. For high-risk merchant categories it can be the largest single receivable and it is almost never reported as one.

Collections that work

Most late payment in small business trade is administrative rather than deliberate, and the fixes are correspondingly dull. Invoice on the day of dispatch rather than at month end. State terms on the invoice, the order confirmation and the statement. Include bank details prominently.

Then chase on a schedule rather than when someone remembers. A polite reminder at seven days past due, a firmer one at fourteen, a call at twenty-one. Most invoices are paid at the first reminder, which is why sending it matters more than what it says.

The single most effective change in most small businesses is having one person responsible for it. Collections that are everybody's job in a small team are nobody's, and the days outstanding figure reflects that precisely.

The credit decision

Offering terms is lending money, and it deserves the same scrutiny a lender would apply. A credit check on new trade accounts costs a few pounds and prevents the losses that account for most bad debt in small business.

Limits should be set and enforced. A customer with a £2,000 limit who has £2,000 outstanding does not get another order until they pay, and enforcing that is uncomfortable exactly once. Businesses that let limits drift discover the exposure only when the customer fails.

Credit insurance is available and is worth pricing for anyone with concentration risk. A business where one customer is 30% of revenue is exposed to that customer's solvency in a way that no amount of chasing addresses, and the premium is usually a small fraction of the exposure.

Getting paid sooner without a facility

Discounts for early payment work on trade customers exactly as they work on you, and the same arithmetic applies. Offering 2% for payment in ten days costs you roughly 37% annualised, which is expensive money and may still be cheaper than an overdraft plus the administrative cost of chasing.

Deposits change the position more cheaply. A 30% deposit on order and the balance on delivery moves a third of the receivable to before the goods ship, and most trade customers accept it as normal for a supplier relationship that is new.

Invoice finance and factoring convert receivables to cash immediately at a cost, and the cost is generally lower than merchant cash advances and higher than a bank facility. It also transfers the collections relationship to a third party, which some customers dislike. Worth comparing against simply chasing better, which is free and in most small businesses has considerable headroom.

Where to go next

The Days Sales Outstanding question rarely arrives on its own. These are the ones that usually come with it:

Cash Conversion Cycle Calculator — Days between paying and being paid.
Days Payable Outstanding Calculator — Early payment discounts are worth more than they look.
Working Capital Calculator — The quick ratio is the honest one.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How is DSO calculated?

Average receivables divided by annual credit revenue, times 365. It measures how long customers take to pay.

What is a good DSO?

Close to your stated terms. A DSO of 45 days on 30-day terms means half your customers are late, which is normal and still worth addressing.

How do I reduce it?

Invoice immediately, chase before the due date rather than after it, offer an early payment discount, and make paying easy. Most late payment is administrative rather than deliberate.

Does this apply to consumer ecommerce?

Barely, consumers pay at checkout. It matters for wholesale, B2B and any channel with credit terms, where it is often the largest single component of the cash cycle.