--- title: "Days Sales Outstanding (DSO): Definition & Formula | Jirav" description: DSO is a measure of the average number of days it takes for a company to collect payments after a sale has been made. Here's how it's calculated. --- ![](https://www.jirav.com/hs-fs/hubfs/Imported%20sitepage%20images/header-logo.png?width=98&name=header-logo.png) - [ Resources ](https://www.jirav.com/resources) - Menu / Resources - [Resource Center ](https://www.jirav.com/resources) Blogs and resources on all things finance, FP&A, and Jirav [Webinars ](https://www.jirav.com/webinars) Learn more about Jirav and FP&A from industry experts [Events ](https://www.jirav.com/events) See our upcoming calendar of events [Help Center ](https://help.jirav.com/) Guide on how to use Jirav - [ Company ](https://www.jirav.com/company) - Menu / Company - [About ](https://www.jirav.com/company) Learn about Jirav’s story and meet our leadership team [News Coverage ](https://www.jirav.com/news) See the latest news and highlights [Press ](https://www.jirav.com/press-releases) Recent company announcements and updates [Careers ](https://www.jirav.com/careers) View current job openings and learn how to join the Jirav Tower ![business_env](https://www.jirav.com/hubfs/business_env.svg) [ For Businesses ](https://www.jirav.com/reporting-planning-purpose-built-for-businesses) ![accounting_calc](https://www.jirav.com/hubfs/accounting_calc.svg) [ For Accounting & CFO Firms ](https://www.jirav.com/reporting-planning-purpose-built-for-accounting-cfo-advisory-firms) [ Get a Demo ](https://www.jirav.com/request-demo) [ Sign in ](https://app.jirav.com/) ![](https://www.jirav.com/hubfs/April2021/images/banner-shap.png) BLOG # Days Sales Outstanding (DSO): Definition & Formula | Jirav [![](https://www.jirav.com/hubfs/April2021/images/fb-icon.png) ](http://www.facebook.com/share.php?u=https://www.jirav.com/standard-metrics-library/days-sales-outstanding/) [![](https://www.jirav.com/hubfs/April2021/images/tw-icon.png) ](https://twitter.com/share?url=https://www.jirav.com/standard-metrics-library/days-sales-outstanding/) [![](https://www.jirav.com/hubfs/April2021/images/in-icon.png) ](http://www.linkedin.com/shareArticle?mini=true&url=https://www.jirav.com/standard-metrics-library/days-sales-outstanding/&summary=&source=CeBIT) 1 minute read ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) ### What is DSO? DSO is a measure of the average number of days it takes for a company to collect payments after a sale has been made. In other words, it's the amount of time it takes for a company to convert its accounts receivable into cash. ### Why DSO Is Important DSO is an important metric for businesses as it indicates how quickly they are able to collect payments from their customers. A high DSO can indicate that a company is experiencing cash flow issues, while a low DSO indicates that a company is able to collect payments quickly and efficiently. A high DSO can also lead to a strain on a company's working capital, as cash is tied up in accounts receivable for longer periods of time. This can make it difficult for a company to pay its bills and meet its financial obligations in a timely manner. ### How to Calculate DSO To calculate DSO, divide the accounts receivable balance by the total credit sales for a given period, and then multiply that number by the number of days in that period. The formula for calculating DSO is: DSO = (Accounts Receivable / Total Credit Sales) x Number of Days in Period For example, if a company has $100,000 in accounts receivable and $500,000 in total credit sales for a 30-day period, the DSO would be: DSO = ($100,000 / $500,000) x 30 = 6 days This means that it takes the company an average of 6 days to collect payment from its customers after a sale has been made. ##### Jirav Published April 25, 2023 ###### Related topics - [Metrics library](https://www.jirav.com/standard-metrics-library/tag/metrics-library) - [Standard metrics library](https://www.jirav.com/standard-metrics-library/tag/standard-metrics-library) ## Related blog posts ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Cash Flow From Investing: Definition & Formula | Jirav [ Read more ](https://www.jirav.com/standard-metrics-library/investing-cash-flow) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### What Is the Debt Ratio? 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