Days Sales Outstanding Calculator
DSO Analysis
Days Sales Outstanding-
Industry Benchmark-
Performance vs Benchmark-
Daily Sales Rate-
Cash Tied Up in Receivables-
DSO Benchmarks by Industry
| Industry | Good DSO | Average DSO | Poor DSO |
|---|---|---|---|
| Retail | <20 days | 30 days | >45 days |
| Professional Services | <35 days | 45 days | >60 days |
| Manufacturing | <40 days | 55 days | >75 days |
| Construction | <50 days | 65 days | >90 days |
| Technology / SaaS | <30 days | 40 days | >55 days |
Key DSO Facts
Formula
AR / Revenue x Days
UK Average
~47 days
Best Practice
<30 days
Late Payment Interest
8%+BoE base
Statutory Payment
30 days
Late Payment Fee
£40-£100
How to Use This Calculator
1
Enter accounts receivable
The total amount owed to you by customers at the measurement date.
2
Enter total revenue
The total credit sales for the same period (annual, quarterly, or monthly).
3
Select the period
Choose annual, quarterly or monthly to match your revenue figure.
4
Choose industry benchmark
Select your industry to compare your DSO against typical performance.
5
Review your DSO
Lower DSO means faster collection. Compare against the benchmark to assess performance.
Frequently Asked Questions
What is DSO?
Days Sales Outstanding (DSO) measures the average number of days it takes to collect payment after a sale. It is calculated as (Accounts Receivable / Total Credit Sales) x Number of Days. A lower DSO means faster collection and better cash flow. DSO is one of the most important cash flow metrics for businesses.
What is a good DSO?
A good DSO depends on your industry and payment terms. If your standard terms are 30 days, a DSO of 35-40 days is acceptable. A DSO significantly above your terms indicates collection problems. Generally, under 45 days is considered good for most UK businesses. DSO should ideally be close to or below your standard payment terms.
How can I improve my DSO?
To reduce DSO: invoice promptly (same day as delivery/service), offer early payment discounts (e.g. 2/10 net 30), automate payment reminders, require deposits or progress payments, conduct credit checks on new customers, use direct debit where possible, and enforce late payment penalties under the Late Payment of Commercial Debts Act.
What is the Late Payment Act?
The Late Payment of Commercial Debts (Interest) Act 1998 gives UK businesses the right to charge interest on late B2B payments at 8% plus the Bank of England base rate. You can also charge fixed compensation of 40-100 pounds per invoice depending on debt size. These rights apply automatically but many businesses do not exercise them.
How does DSO affect cash flow?
Each day of DSO represents one days revenue tied up in receivables. If your daily revenue is 5,000 pounds and your DSO is 60 days, you have 300,000 tied up in receivables. Reducing DSO from 60 to 45 days would free up 75,000 in cash. This directly impacts your working capital and may reduce the need for borrowing.
Official Sources & References
Data verified against official UK government sources. Last checked April 2026.