Finance Calculator
Accounts Receivable Days Calculator
Calculate how many days it takes on average to collect payment from your customers. Enter your trade receivables and annual revenue to see your debtor days (DSO) and an instant cash collection assessment.
Enter your receivables and revenue
How are accounts receivable days calculated?
Accounts receivable days — also known as debtor days or days sales outstanding (DSO) — measures the average number of days between issuing an invoice and receiving payment. It is one of the most widely used metrics for assessing cash collection efficiency.
AR Days = (Trade Receivables / Annual Revenue) — 365
Daily Revenue = Annual Revenue / 365
Trade receivables is the total amount owed to your business by customers at a given point in time. This is found on the balance sheet under current assets.
Annual revenue represents total sales (or credit sales if known) over a 12-month period. Using credit sales gives a more accurate figure, but total revenue is commonly used as a proxy.
The result tells you how many days' worth of revenue is currently outstanding. A lower number means customers are paying faster, freeing up cash for your business.
Assumptions and caveats
- •The calculation uses a point-in-time receivables balance. This may not be representative if your business is seasonal.
- •Using total revenue rather than credit sales will understate your true debtor days if a material portion of sales are cash or prepaid.
- •The quality of the debtor book matters. Aged or disputed invoices may inflate the figure without reflecting normal collection patterns.
- •Industry benchmarks vary widely. Construction and public sector contracts often have much longer debtor days than retail or SaaS.
Frequently asked questions
Accounts receivable days — also known as debtor days or days sales outstanding (DSO) — measures the average number of days it takes a business to collect payment from customers after an invoice has been issued. It is a key indicator of cash collection efficiency.
Under 30 days is excellent, 30 to 45 days is good for most industries, and 45 to 60 days is moderate. Above 60 days may indicate slow collections and potential cash flow issues. The ideal figure depends on your industry and the payment terms you offer to customers.
Higher debtor days mean more cash is tied up in unpaid invoices, reducing available working capital. This can create cash flow gaps where the business struggles to pay suppliers, staff, or overheads. Reducing debtor days accelerates cash inflows and improves liquidity.
Invoice finance does not reduce your actual debtor days, but it eliminates the cash flow impact. By advancing 70% to 90% of an invoice value upfront, invoice finance effectively converts your receivables into immediate cash — bridging the gap between invoicing and customer payment.
Struggling with slow-paying customers?
Speak to the Spark team about invoice finance solutions that turn unpaid invoices into immediate cash flow.
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