Calculate days sales outstanding to see how long customer invoices remain unpaid on average. Use credit sales and average accounts receivable from the same period.
Opening receivables of $18,000 and closing receivables of $22,000 average $20,000. Dividing by $90,000 of quarterly credit sales and multiplying by 90 gives 20 days DSO.
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DSO = average accounts receivable ÷ credit sales × days in period. Average receivables are normally opening plus closing receivables divided by two. Compare the result with your contractual payment terms.
Days sales outstanding estimates the average number of days it takes a business to collect credit sales.
DSO equals average accounts receivable divided by credit sales, multiplied by the number of days in the period.
No. DSO is intended to measure credit sales. Including immediate cash sales makes collection performance look artificially better.
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General information only; reviewed August 2026.