Accounts Receivable Days Calculator

Accounts receivable days (DSO) calculator for faster cash flow visibility

Accounts receivable days, often called Days Sales Outstanding (DSO), estimates how long it takes customers to pay you after you make a credit sale. It turns a balance sheet number (accounts receivable) and an income statement number (credit sales) into an easy time metric: “about X days to collect.” That single number is useful because it links sales activity to cash flow outcomes. Sales can look strong while cash is tight if customers pay slowly.

This calculator gives you a practical AR days estimate using three inputs: your accounts receivable balance, your net credit sales for a chosen period, and the number of days in that period. The result is an average. It will not match every customer’s payment behavior, but it is good enough to spot trend changes, compare departments, and validate whether your collections process is improving or drifting.

To use it, choose a period that matches how you manage your business (monthly, quarterly, or annually). Enter the accounts receivable balance for that same period end date. Then enter net credit sales for the period. “Net credit sales” means sales made on credit, after returns, discounts, and allowances, not total sales if you have significant cash sales. Finally, enter the days in the period (30, 31, 90, 365, or your exact day count). The calculator returns AR days and gives you a simple interpretation for planning and control.

Assumptions and how to use this calculator

• Credit sales focus: The cleanest DSO uses net credit sales. If you only have total sales, the output is still usable, but it can understate or overstate true collection speed depending on how much is cash versus credit.
• Receivables timing: Using the period-end receivables balance is common and quick, but it can be distorted by seasonality or a big invoice spike at month end. If seasonality is strong, consider using an average receivables balance across the period.
• Average, not a promise: AR days is an average across customers and invoices. A single late payer or a concentrated customer base can move the metric a lot.
• Same period alignment: Receivables and sales must refer to the same period. Mixing a month-end receivables number with annual sales will produce a misleading result.
• Use trends and comparisons: AR days is most useful when tracked over time or compared to your payment terms, your industry, or internal targets.

Common questions

What is a “good” accounts receivable days number?

There is no universal “good” number. A sensible baseline is your typical payment terms. If you sell on 30-day terms, an AR days value near 30 to 40 can be reasonable depending on billing cycles and customer behavior. If the number is consistently far above your terms, it usually signals slow collections, billing disputes, weak credit control, or customers under stress. The right target is one that supports stable cash flow without damaging customer relationships.

What is the formula for accounts receivable days (DSO)?

A common formula is: AR Days = (Accounts Receivable ÷ Net Credit Sales) × Days in Period. The idea is to estimate how many days of sales are currently tied up in receivables. If receivables rise faster than credit sales, AR days increases, meaning cash is being collected more slowly.

Should I use average accounts receivable or period-end accounts receivable?

If your business is stable and not seasonal, period-end receivables is often fine for quick reporting. If sales fluctuate strongly, period-end receivables can be misleading. Using an average receivables balance (for example, (opening AR + closing AR) ÷ 2, or an average of monthly closes) typically gives a more reliable DSO. This calculator uses the balance you provide, so you can choose either approach.

What should I do if AR days is increasing?

First, confirm your inputs are consistent and the period choice makes sense. Then look for operational causes: invoices sent late, unclear billing details, disputes taking too long, credit limits not enforced, or collections follow-ups slipping. Segment by customer and by aging bucket to find concentration. A small number of overdue accounts often drives most of the change. Fix the upstream issues first (billing accuracy and dispute turnaround), then tighten the follow-up rhythm.

Does AR days help with cash flow forecasting?

Yes. AR days is a practical bridge between sales and expected cash receipts. When AR days rises, cash receipts lag further behind sales, and you typically need more working capital to fund operations. When it falls, cash converts faster. For forecasting, use AR days as a reality check: if your forecast assumes faster collections than your current DSO, the forecast is optimistic unless you have a concrete plan to change collections performance.