Accounts Receivable Aging Calculator
Bucket your receivables, get your DSO, and see the actual dollars trapped by slow-paying customers — not just the ratio.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This tool buckets your receivables by age (0–30, 31–60, 61–90, 90+ days), computes DSO — how long customers actually take to pay versus what your invoices say — and converts the gap into dollars: the cash trapped financing your customers instead of running your business. Most DSO tools stop at the ratio; the dollar figure is what makes the collections problem concrete enough to act on.
The formulas
- Total accounts receivable
- sum of the four aging buckets
- DSO (days sales outstanding)
- (total AR ÷ credit sales in the period) × days in the periodUndefined when credit sales are zero — there is nothing outstanding to age against.
- Share of AR past terms
- sum of buckets that start beyond your stated terms ÷ total ARWith net-30 terms, that is the 31–60, 61–90, and 90+ buckets.
- Cash trapped by slow payers
- (credit sales ÷ days in the period) × (DSO − stated terms, if positive)Average daily credit sales × the days customers run past terms — the receivable balance attributable to slow payment.
Worked example
- Say your receivables are $20,000 current (0–30 days), $8,000 at 31–60, $4,000 at 61–90, and $3,000 over 90 days — $35,000 in total — against $90,000 of credit sales over a 90-day period, on net-30 terms.
- DSO = ($35,000 ÷ $90,000) × 90 = 35 days.
- AR past terms = ($8,000 + $4,000 + $3,000) ÷ $35,000 ≈ 43% of receivables.
- Cash trapped = ($90,000 ÷ 90) × (35 − 30) = $1,000/day × 5 days = $5,000.
- At 35 days, DSO is within 5 days of the 30-day terms — the "on terms" band — so the verdict is good even though $5,000 is still riding past due.
Rates, benchmarks & sources
- DSO formula: (AR ÷ credit sales) × period days — the count-back method used in most accounting texts. — Standard receivables arithmetic
- Interpretation bands: DSO within terms+5 days is on-terms; terms+6 to terms+15 is drifting; beyond terms+15 signals a collections problem. — Collections rule of thumb
- A 90+ day bucket above 10% of AR draws a warning — receivables over 90 days collect at sharply lower rates. — Collections rule of thumb
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- DSO is an average, and averages hide concentration — one large customer at 120 days can look the same as many customers at 40. Read the bucket table alongside the ratio.
- The calculation covers credit sales only; if part of your revenue is paid at the point of sale, including it in the sales figure will understate DSO.
- DSO moves with sales volume as well as payment speed — a strong sales month adds fresh receivables and can shift the number without any customer paying slower or faster.
- The "cash trapped" figure estimates the receivable balance attributable to days beyond terms; it is a sizing tool, not a collections forecast, and says nothing about which specific invoices will actually be recovered.
Frequently asked questions
What is the difference between DSO and my payment terms?
Terms are what your invoices say; DSO is how long customers actually take to pay. If you invoice net-30 and your DSO is 45, customers are running 15 days past due on average — and the gap between the two, multiplied by your daily credit sales, is cash financing your customers instead of your business.
What is a good DSO for a small business?
There is no single benchmark — it depends on your stated terms. The rule of thumb this tool uses judges DSO relative to those terms: within about 5 days of terms is healthy, 6–15 days over means customers are drifting, and more than 15 days over signals a collections problem. A DSO of 40 is fine on net-30 with slow-mail customers and alarming on due-on-receipt.
Why is the 90+ day bucket treated so differently?
Because collectability falls off with age — receivables that cross 90 days collect at sharply lower rates, which is why the tool warns when that bucket exceeds 10% of total AR (a rule of thumb). Invoices that old usually need direct escalation: a phone call, a payment plan, or a decision about collections or write-off, rather than another emailed statement.
How do I actually bring DSO down?
The common levers are mechanical: invoice immediately rather than at month-end, send statements the day an invoice passes terms (day 31 on net-30), require deposits from new or slow accounts, and consider early-pay discounts — the Net Terms Impact calculator on this site prices what a discount like 2/10 actually costs. Many owners find the first two alone move the number, because a surprising share of late payment is simply unprompted.
What period should I measure DSO over?
A quarter (90 days, the tool default) is common: long enough to smooth a lumpy sales month, short enough to catch drift early. Whatever you pick, the AR snapshot and the credit-sales figure must cover the same window — pairing today’s receivables with a full year of sales will make DSO look artificially low.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.