How this calculator works
A/R days, also called days sales outstanding or DSO, converts the receivables balance into a number of days of sales. Use one average balance when your accounting system reports it, or enter the opening and closing balances so the calculator averages them. Net credit sales exclude cash sales and sales returns because only credit sales create receivables. Fewer days means cash is collected faster. The measure is identical to the average collection period, and this page keeps the DSO framing and the single-balance input that finance teams usually quote.
Formula
A/R days = average accounts receivable / net credit sales × days in the period. Average receivables = (opening + closing) / 2. Receivables turnover = net credit sales / average receivables.
Worked example
Average receivables of $50,000 against $400,000 of net credit sales over 365 days give A/R days of 50,000 / 400,000 × 365 = 45.625 days. Turnover is eight times a year and average credit sales are $1,095.89 a day. With an opening balance of $40,000 and a closing balance of $60,000 the average is the same $50,000.
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Frequently asked questions
Should I use 365 or 360 days?
Use the number of days actually covered by the sales figure. A 365-day year is usual for annual reports; some credit departments use a 360-day banker's year. Keep the choice consistent between periods.
Does a lower figure always mean better collections?
Usually, but a very low figure can also mean tight credit terms that turn away sales, or heavy use of early-payment discounts. Compare the figure with your stated terms and with earlier periods.
How is DSO different from the average collection period?
They are the same calculation under different names. DSO is the term used in credit and treasury reporting, while average collection period is common in accounting analysis. This page lets you start from a single average balance; the average collection period page also accepts a turnover ratio.