Blueringed · Free cash flow tool
Debtor Days Calculator
How much cash could your business release by getting paid sooner? Enter your annual credit sales and compare your current debtor days with a realistic target.
Debtor days, also called days sales outstanding (DSO), indicate how long customers take to pay on average.
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The example starts with £1 million annual credit sales and a reduction from 45 to 40 days. Click Calculate to see the estimate.
Estimated cash released
- Reduction in debtor days
- Cash represented by one day
- Modelled receivables at current DSO
- Modelled receivables at target DSO
Figures are rounded to the nearest pound. Modelled receivables are estimates, not your actual ledger balance.
Cash released is different from extra profit
Collecting an existing invoice sooner moves money from receivables into your bank account. It does not create another sale or increase profit by the amount collected.
This estimates a one-off reduction in cash tied up in receivables when you achieve a lower DSO. Maintaining that improvement keeps less cash tied up at the same sales level; it does not release the same amount again every year.
How the debtor days calculator works
Estimated cash released = annual credit sales ÷ 365 × reduction in debtor days.
For example, £1,000,000 annual credit sales divided by 365 is approximately £2,740 per day. Reducing debtor days by five days represents approximately £13,699 of cash released.
The estimate assumes steady sales, a 365-day year and a sustained improvement in collections. Seasonality, growth, disputes, bad debts and tax treatment can affect the actual result. This is a planning illustration, not a cash forecast or guaranteed saving.
How do I calculate my current debtor days?
A common calculation is trade receivables ÷ credit sales for the period × days in that period. Use comparable figures: for example, a year-end receivables balance and the year's credit sales, with consistent treatment of VAT or sales tax. An average receivables balance can help reduce snapshot effects. Follow a consistent method when comparing periods.
Can I enter total turnover?
Only if all of it is credit sales. If some customers pay immediately, enter only the sales where payment is deferred. Including immediate-payment sales would overstate the cash represented by each debtor day.
Does lower DSO mean customers must have shorter terms?
Not necessarily. Issuing invoices promptly, submitting them correctly, resolving disputes and following up missed promises may reduce delays within existing terms. Consider the customer relationship and commercial implications before changing agreed terms.
Where should I start improving collections?
Check completed work that has not been invoiced, rejected invoices, missing purchase orders, unresolved disputes and overdue payment promises. Assign an owner and a next action to each blocker. Our invoice checklist and credit control toolkit can help structure that review.
Find what is delaying your cash
Use the free Order to Cash Health Check to review your process and identify areas that deserve closer attention.
Start the free Health Check