Free tool
DSO calculator
Days Sales Outstanding with the arithmetic shown, and a reading that is honest about the one thing most DSO pages skip: "good" only means anything relative to the terms you offer.
Days sales outstanding
39days
Normal B2B drift. Some slide past due is structural (AP batching). Worth watching, not alarming, against net-30 terms.
The arithmetic
DSO = (accounts receivable / credit sales in period) x days in period
(52,000 / 120,000) x 90 = 39 days
Rule-of-thumb readings above assume net-30 terms; judge DSO against the terms you actually offer.
Reading the number
What is a good DSO, honestly
DSO bundles two different things: the payment terms you chose to offer, and how far beyond them customers stretch. Only the second one is a collections problem. So judge the number against your own terms: on net 30, a DSO in the low 30s is healthy, the low 40s is ordinary B2B drift, and anything past 45 means invoices are going unchased. Around 60 on net-30 terms, you are functionally an unpaid lender to your slowest customers.
Watch for the two standard traps. Growth distorts DSO (a fast-growing book shows rising DSO even when everyone pays on time), and averages hide the tail: a DSO of 38 can conceal two large invoices sitting at 120 days. Read DSO next to the aging report, which shows where the money actually is, and track the trend on a consistent method rather than the level in isolation. The full write-up, with the levers that actually lower it, is in What is a good DSO?
FAQ
DSO questions
What is DSO?
Days Sales Outstanding: the average number of days a dollar of credit sales spends as a receivable before becoming cash. It is the standard headline metric for how fast customers actually pay you.
What is the DSO formula?
The simple method: DSO = (accounts receivable / credit sales in the period) x days in the period. With $52,000 outstanding against $120,000 of credit sales over 90 days: (52,000 / 120,000) x 90 = 39 days.
What is a good DSO?
Relative to your terms, not an absolute number. At or under your terms (30 or less on net 30) is excellent; up to about 1.5x your terms is normal B2B drift from AP batching; beyond that, collections are leaking; around 2x your terms, treat it as an emergency. Cross-industry comparisons mostly reflect different terms, not different performance.
Why does the calculator say DSO is undefined?
Because your credit sales for the period were zero, and dividing by zero has no meaning. The honest answer is "undefined for this period", not zero; a zero would imply instant collection.
How do I lower DSO?
In rough order of effect: chase every invoice on a fixed escalating schedule (the biggest cause of high DSO is invoices nobody followed up), invoice immediately and correctly, put a payment link in every reminder, send a pre-due heads-up, add agreed late fees, and fix chronic late payers structurally with deposits or shorter terms.
High DSO is usually a chasing problem
Duebay computes DSO live from your invoices and runs the sequences that bring it down.