The accounts receivable aging calculator categorizes your outstanding invoices into aging buckets to identify collection risk and calculate your Days Sales Outstanding (DSO).
Enter Amounts by Aging Bucket
How to Use AR Aging to Improve Cash Flow
The accounts receivable aging calculator is the foundation of cash flow management for B2B businesses. Review your AR aging weekly — patterns reveal systemic collection problems before they become cash crises.
Collection Priority by Bucket
Current (0-30 days): Send automated payment reminders at day 25. 31-60 days: Personal call from accounts receivable team. 61-90 days: Escalate to sales rep or manager, consider payment plan. 90+ days: Consider collections agency, hold new orders, assess bad debt reserve.
Reducing DSO
Every 10 days of DSO reduction on $1M annual revenue frees up $27,000 in cash. Strategies: require credit cards for new customers under $10K, offer 2/10 net 30 early payment discounts, automate invoice delivery and reminders, enforce credit limits before shipping new orders.
FAQ
What is accounts receivable aging?
AR aging categorizes outstanding invoices by how long they've been unpaid: current (0-30 days), 31-60 days, 61-90 days, and 90+ days. Older buckets have lower collection probability. It's the key tool for managing cash flow and identifying bad debt risk.
What is Days Sales Outstanding (DSO)?
DSO = (Accounts Receivable ÷ Annual Revenue) × 365. It tells you the average number of days it takes to collect payment after a sale. A DSO of 45 means customers take 45 days on average to pay. Lower DSO = faster cash collection.
What is a good DSO?
Best-in-class DSO varies by industry: services/consulting 30-45 days, B2B products 45-60 days, construction 60-90 days. Generally, DSO should be within 5-10 days of your stated payment terms. DSO higher than your terms signals collection problems.
Is this calculator free?
Yes, completely free with no signup.