Calculate your Days Sales Outstanding and see how much cash you're leaving on the table.
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AgentCollect customers typically reduce DSO by 30-40% within 60 days. AI agents contact overdue accounts automatically the moment an invoice goes past due — the single biggest driver of DSO improvement.
Formula
How DSO Is Calculated
DSO Formula
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days
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Accounts Receivable
Total amount owed to you by customers at the end of the period
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Total Credit Sales
Total revenue from sales made on credit during the period
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Number of Days
Days in the measurement period (30, 90, or 365)
Use the same time period for both your AR balance and credit sales. Most CFOs calculate DSO quarterly (90 days) for the clearest picture of trends.
Benchmarks
DSO Rating Scale
DSO Range
Rating
What It Means
< 30 days
Excellent
Strong cash position. Collections are working effectively.
30 – 45 days
Average
Industry norm for most B2B companies. Monitor for upward trends.
45 – 60 days
Watch
Cash flow pressure building. Time to review collection processes.
> 60 days
At Risk
Immediate action needed. You're financing your customers' operations.
By Industry
Typical DSO by Industry
Industry
Typical DSO
SaaS
35 – 45 days
Manufacturing
50 – 65 days
Professional Services
40 – 55 days
Construction
60 – 80 days
Healthcare
45 – 60 days
Equipment Leasing
50 – 70 days
Industry benchmarks are useful as a reference but your best comparison is your own historical trend. A rising DSO over consecutive quarters is always a warning sign, regardless of industry averages.
FAQ
Frequently Asked Questions
What is Days Sales Outstanding (DSO)?
Days Sales Outstanding (DSO) is the average number of days it takes a company to collect payment after a sale has been made on credit. It measures how quickly a business converts its accounts receivable into cash. A lower DSO means faster collections and healthier cash flow.
What is a good DSO?
Under 30 days is considered excellent — it means your collections are highly effective. 30-45 days is the industry average for most B2B companies. 45-60 days indicates growing cash flow pressure. Over 60 days is a warning sign that requires immediate attention.
How do I reduce my DSO?
Key strategies include: shortening payment terms (Net 30 instead of Net 60), sending invoices immediately upon delivery, following up on overdue accounts within 7 days, offering early payment discounts (2/10 Net 30), and using automated AI collection agents that contact debtors the moment an invoice goes past due.
How does DSO affect cash flow?
DSO directly impacts your available cash. Every extra day of DSO means more money is locked in unpaid invoices instead of your bank account. For example, a company with $10M in annual revenue and a DSO of 60 days has roughly $1.6M tied up in receivables. Reducing DSO by just 10 days would free up approximately $274K in working capital.
What is the difference between DSO and AR turnover?
DSO and AR turnover measure the same thing from different angles. AR Turnover Ratio = Total Credit Sales / Average Accounts Receivable — it tells you how many times per year you collect your average AR balance. DSO = 365 / AR Turnover — it converts that ratio into days. A higher AR turnover (or lower DSO) indicates more efficient collections.