Calculator
Receivables Days (DSO) Calculator
Days Sales Outstanding (DSO) measures how long, on average, your customers take to pay you. High DSO means cash is stuck in unpaid invoices — a common reason profitable Indian businesses run short of cash. This calculator takes your accounts receivable and annual credit sales to return your DSO and receivables turnover, so you can see whether your collection cycle is healthy and how much faster collection would free up working capital.
Total unpaid customer invoices outstanding.
Yearly sales made on credit (not cash sales).
Use credit sales (not cash sales) for accuracy. Compare DSO against the payment terms you actually offer — a DSO well above your stated terms signals a collection problem.
What your result means
- A lower DSO means you collect cash faster — compare it to the credit period you actually offer; if DSO is well above your terms, collections are slipping.
- A rising DSO over time is an early sign of collection problems or customers in distress — act before it becomes bad debt.
- Every extra day of DSO is cash locked in receivables, directly enlarging the working capital (or loan) you need.
How to use this calculator
- Total your outstanding accounts receivable — all unpaid customer invoices.
- Enter your annual credit sales (exclude cash sales).
- Read the DSO — the average number of days to get paid.
- Compare DSO against the payment terms you actually offer customers.
- If DSO exceeds your terms, tighten follow-ups, invoice faster, or ask for advances.
The formula
DSO = (Accounts receivable ÷ Annual credit sales) × 365. Receivables turnover = Annual credit sales ÷ Accounts receivable. Lower DSO means faster collection.
Worked example
You have ₹8,00,000 in unpaid invoices and ₹96,00,000 in annual credit sales. DSO = (8 ÷ 96) × 365 ≈ 30 days, and receivables turnover ≈ 12 times a year. If your invoices say “net 15” but DSO is 30, customers are taking twice as long as agreed — tightening collection to 15 days would release roughly ₹4,00,000 of cash.
When to use it
- Diagnosing why a profitable business is short of cash.
- Setting and enforcing realistic customer payment terms.
- Measuring whether collection efforts are actually working over time.
- Estimating the cash freed up by collecting a few days faster.