Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Line-of-credit rate, or return you'd earn elsewhere
Result
Cash trapped in receivables
$339,726
Annual carrying cost of that cash
$37,370
One-time cash released at target DSO
$120,548
Recurring annual saving
$13,260
Days improved
22
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Got your number — what next?
Pick one, it takes 20 secondsHow to use this
- 1Enter annual revenue ($).
- 2Enter current dso (days).
- 3Enter target dso (days).
- 4Enter cost of capital (%) — Line-of-credit rate, or return you'd earn elsewhere.
- 5Read your cash trapped in receivables on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
Days sales outstanding measures how long revenue sits as an invoice before it becomes money. Every extra day locks up working capital you either finance or forgo returns on. This calculator converts your annual revenue and average DSO into the dollar value of cash permanently trapped in receivables, prices that at your cost of capital, and shows what improving DSO by a target number of days would release in one-time cash and recurring financing savings. For an agency doing $2M at 62 days, moving to 40 days frees roughly $120,000 of cash — usually a bigger win than any cost-cutting exercise available in the same quarter.
Worked example
Using the values the calculator loads with:
Inputs
- Annual revenue: 2000000 $
- Current DSO: 62 days
- Target DSO: 40 days
- Cost of capital: 11 %
Results
- Cash trapped in receivables: $339,726.03
- Annual carrying cost of that cash: $37,369.86
- One-time cash released at target DSO: $120,547.95
- Recurring annual saving: $13,260.27
- Days improved: 22
What each field means
Inputs
- Annual revenue ($)
- The annual revenue used in the calculation, measured in $. Starts at 2000000 $ so you have a working example on load.
- Current DSO (days)
- The current dso used in the calculation, measured in days. Starts at 62 days so you have a working example on load.
- Target DSO (days)
- The target dso used in the calculation, measured in days. Starts at 40 days so you have a working example on load.
- Cost of capital (%)
- Line-of-credit rate, or return you'd earn elsewhere
Results
- Cash trapped in receivables
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual carrying cost of that cash
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- One-time cash released at target DSO
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Recurring annual saving
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Days improved
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
What DSO is normal for an agency?
Small agencies billing net-30 typically land at 40-55 days once late payers are included; enterprise-heavy shops on net-60 often sit at 70-90. If your DSO is more than 20 days past your stated terms, the problem is collections process, not client behaviour.
What actually lowers DSO?
Deposits and milestone billing, invoicing on the day work completes rather than month-end, automated reminders at day 3 past due, and a named owner for collections. Discounting for early payment works but is expensive — 2/10 net 30 is roughly a 36% annualised rate.
Is trapped cash a real loss?
It's a real cost, not a loss — you'll eventually collect it. The cost is what that capital would have earned or what you pay to borrow against it while you wait, which is exactly what the carrying-cost line shows.
How does DSO interact with growth?
Badly. Growing revenue with a high DSO consumes cash faster than it generates it, which is how profitable agencies run out of money. Fix DSO before a growth push, not during one.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Days Sales Outstanding Cost Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/agency-dso-impact
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/agency-dso-impact" target="_blank" rel="noopener">Days Sales Outstanding Cost Calculator — RevenueLab</a> (2026).</p>
Source: [Days Sales Outstanding Cost Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/agency-dso-impact) (2026).