Receivables Turnover Calculator
Find receivables turnover and the average days it takes customers to pay.
About the Receivables Turnover Calculator
Enter the year's net credit sales and your accounts receivable at the start and end of the year. The calculator gives receivables turnover and days sales outstanding (DSO), the average number of days customers take to pay.
Compare DSO with your payment terms: DSO of 45 days on 30-day terms means customers pay late on average.
The formula
Turnover = credit sales ÷ average receivables; DSO = 365 ÷ turnover
Worked example
Credit sales 900,000; receivables 100,000 at the start, 120,000 at the end
- Average receivables: 110,000
- Turnover = 900,000 ÷ 110,000 = 8.18×
- DSO = 365 ÷ 8.18 = 44.6 days
Things to keep in mind
- Seasonal businesses should average monthly balances rather than two year-end figures.
Questions people ask
How can I lower DSO?
Invoice promptly, offer early-payment discounts and follow up overdue accounts.
Should cash sales be included?
No, only sales made on credit.
What's a good DSO?
Close to your payment terms; within about 1.3× the terms is often considered healthy.