DSO & AR Aging Optimizer
Measure collections efficiency and identify trapped cash in AR. Enter values for instant results with step-by-step formulas.
Worked Examples
Example 1: Slow Collections
Problem:$150k AR, $1.2M Sales. DSO = 45.6 days.
Solution:If target is 30 days, you have ~$50k trapped in AR.
Result:46 Days
Example 2: Fast Collections
Problem:$50k AR, $1.2M Sales. DSO = 15 days.
Solution:Excellent liquidity. Cash is in the bank, not the books.
Result:15 Days
Frequently Asked Questions
What is DSO?
Days Sales Outstanding. It represents the average time it takes for a company to convert its credit sales into cash.
Is high DSO bad?
Usually, yes. It implies you are acting as a bank for your customers. However, in some industries with long payment terms (Construction), high DSO is normal.
What is AR Aging?
A report that categorizes receivables by how long they have been outstanding (0-30 days, 31-60 days, 90+ days). Old debt becomes bad debt.
How can I lower DSO?
Invoice immediately, offer early payment discounts (2/10 Net 30), accept credit cards, and automate follow-up emails.