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Days Sales Outstanding

Days Sales Outstanding is part of Toolspire and is ready as soon as this page loads. ₹100 of receivables against ₹1,000 of credit sales is 36.5 days. Cash sales do not belong in the sales box, or the days look shorter than collection really is.

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On this page

What you can do here

Days, not a percent

The headline is a length of time. A bigger number is slower collection.

Credit sales in the name

The field says credit sales so the cash-till total is not the default input.

36.5 is exact

One tenth of a year of sales sitting in receivables is 36.5 days. 100/1000 is that tenth.

The sequence

How to use the Days Sales Outstanding

  1. 1

    Take receivables from the same closing date

    An average receivable is sometimes used. If you average, do it before you type.

  2. 2

    Strip cash sales

    Only sales that were invoiced on credit belong in the second box.

  3. 3

    Do not paste a monthly sales number into a 365-day formula

    Multiply the month by 12 first, or the days will be about twelve times too long.

Worth knowing

  • Days Sales Outstanding on Toolspire: DSO = receivables ÷ credit sales × 365.
  • 100 ÷ 1,000 × 365 = 36.5 days.
  • The sales figure should be credit sales. Cash sales that never created a receivable shorten the result if you leave them in.
  • A year is 365 days. Use a matching one-year sales total, not a month, unless you also change the day count yourself outside this page.

Collection time from one fraction

If receivables are a tenth of the year’s credit sales, customers are taking about a tenth of a year to pay. A tenth of 365 is 36.5. The formula assumes sales arrive evenly and that the receivable balance is typical. A big December invoice will stretch a 31 December snapshot. The page does not smooth that.

FAQ

Questions about Days Sales Outstanding

Where does Days Sales Outstanding run?

Days Sales Outstanding runs in this tab on Toolspire. What you type or drop in is not sent to us and is not stored on a server.

What is DSO for receivables of 100 and credit sales of 1,000?

36.5 days.

What sales number should I use?

Credit sales for the same year as the 365-day count. Leave cash sales out.

Is a lower DSO always better?

It means faster collection on these numbers. A lower figure caused by refusing credit entirely is a commercial choice, not a formula win.

Why can I not type a 30-day month?

The day count is fixed at 365 so the sample stays exact. Annualise a short period before you type it.

Keep going

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