- Templates for monthly/annual calculation of DSO
- Industry-based average and Best Possible DSO(BSO) insights
- Average savings calculation based on DSO reduction
- 13 tried and tested tips to reduce DSO
What is DSO?
DSO Calculation Methods
DSO = Accounts Receivables/ Total Credit Sales x Average No. of Days
Let’s say a business is making 40,000 in credit sales and recovering accounts receivable worth 20,000 in accounts receivable in average 45 days.
DSO= 20,000/40,000 x 45 = 22.5 days
Why is DSO a Critical Metric for Businesses?
- Your average sales and accounts receivable status.
- How efficient your collections team is — based on that, you can optimize your credit policy.
High DSO: A high DSO indicates that a business is taking more days to collect its debt.
Low DSO: A low DSO means a business is collecting its debt within its payment time and that it has promptly paying customers.
How to Calculate DSO in Excel?
Step 2: Take 5 mins to fill out your sales data and accounts receivable information
Step 3: Benchmark your DSO with industry’s best possible DSO. Calculate the dollars you can save by reducing your DSO.