What is a good DSO for Australian businesses?

For Australian B2B businesses the typical benchmark is 30–45 days. A DSO above 60 days suggests a significant portion of receivables are overdue. The 'right' DSO depends on your standard payment terms — if your terms are 30 days and your DSO is 50, you have around 20 days of overdue book.

How is DSO calculated?

DSO = (Closing accounts receivable ÷ Total credit sales for the period) × Number of days in the period. Use a 90-day period for a quarterly view, or 365 days for an annual view.

What causes DSO to rise?

Common causes include: slow-paying customers, ineffective collections follow-up, disputes left unresolved, customers with genuine cash-flow difficulties, and credit extended to customers who should not have received it.

How do I use DSO to identify problem accounts?

Calculate DSO for each customer individually. Customers whose individual 'DSO' is well above your terms are the first to contact and, if they don't respond, the first to refer to Merion.

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Days Sales Outstanding (DSO) Calculator

DSO measures how quickly your business collects cash from credit sales. A rising DSO is one of the earliest warning signs of a deteriorating debtor book. Use this calculator to measure your current DSO and benchmark it against industry norms.

Receivables data

Closing accounts receivable balance (AUD)

Total outstanding invoices at the end of the period.

Total credit sales for the period (AUD)

Total invoiced sales (not cash sales) during the measurement period.

Number of days in period

How DSO is calculated

Days Sales Outstanding (DSO) measures how long it takes your business to collect payment after a sale is made. It is calculated as: DSO = (Accounts Receivable ÷ Credit Sales) × Days. A lower DSO means faster cash conversion. The AU B2B industry average sits at approximately 45 days; a DSO above 60 days is a warning sign that collection processes may need tightening.

This is a general, indicative estimate for illustration only — not financial or legal advice. DSO benchmarks vary by industry and payment terms. Consult your accountant for a full working capital assessment.

What is DSO and why does it matter?

Days Sales Outstanding (DSO) is the average number of days between issuing an invoice and receiving payment. The formula is: DSO = (AR balance ÷ credit sales) × days in period. The typical Australian B2B benchmark is 30–45 days.

A rising DSO is a concrete indicator that cash is being locked in your receivables ledger. Even if revenue looks healthy on paper, a DSO creeping above your payment terms means an increasing proportion of that revenue has not yet turned into cash.

How to reduce DSO

The most effective levers are: invoice on the same day goods or services are delivered; tighten credit terms where possible; send payment reminders before the due date, not just after; set up direct debit for regular customers; and for accounts that remain overdue despite follow-up, refer them to Merion promptly rather than continuing to chase internally.

DSO and debt recovery

The accounts contributing most to your DSO — those aged well beyond your terms — are the prime candidates to refer. Every account that Merion collects removes it from your AR balance and immediately improves your DSO. See also: Cost of late payment calculator and Debt age impact calculator.

This is an indicative calculation only — not financial or legal advice. DSO benchmarks are general guides; what constitutes a good result varies by industry and payment terms.

Reduce your DSO

Refer stubborn accounts to Merion.

Commission-only recovery — you pay nothing unless we collect. Every recovered debt reduces your DSO.

Refer a debt Cost of late payment

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