# DSO Calculation Excel Template

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Calculate your Days Sales Outstanding (DSO) with our Excel-based calculator, and get additional, actionable insights on the Best Possible Day Sales Outstanding(BPDSO). This DSO calculator is an industry-level yardstick; it also depicts how a reduction in Day Sales Outstanding leads to potential savings.

Calculate your Days Sales Outstanding (DSO) with our Excel-based calculator, and get additional, actionable insights on the Best Possible Day Sales Outstanding(BPDSO). This DSO calculator is an industry-level yardstick; it also depicts how a reduction in Day Sales Outstanding leads to potential savings.

## What’s inside?

1. Templates for monthly/annual calculation of DSO
2. Industry-based average and Best Possible DSO(BSO) insights
3. Average savings calculation based on DSO reduction
4. 13 tried and tested tips to reduce DSO

## What is DSO?

DSO (Days Sales Outstanding) is the average number of days it takes for a company to collect its accounts receivables. This is quantified by how long it takes to convert credit sales to cash. For instance, if the DSO of a company is 45 days, it means that they are able to collect back their past dues within 45 days, approximately.

## DSO Calculation Methods

DSO can be calculated with various methods, but the simplest DSO calculation formula is:

### 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.

Then,

## Why is DSO a Critical Metric for Businesses?

A business can measure its financial health with DSO. How fast a company can collect its receivables back indicates its impact on working capital. DSO is a critical metric because it can help you understand:

• 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 1: Download the excel template

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.