O2C VerseCalculator
Best possible DSO and ADD
Separate what your payment terms explain from what late payment adds on top.
Average days delinquent (ADD)
—days
Enter the values to see the result.
How it is calculated
Best possible DSO = current AR ÷ credit sales × days DSO = total AR ÷ credit sales × days ADD = DSO − best possible DSO
Best possible DSO is the DSO you would have if every customer paid exactly on the due date: only receivables that are not yet due would be open. Whatever DSO sits above it is lateness, which is the part collections can actually act on.
How to read it
- High DSO, low ADD. Your terms and customer mix explain the number. Look at terms, not at the collections team.
- Moderate DSO, high ADD. Customers are paying late. Look at dunning, disputes and cash application.
- Trend ADD, not just DSO. A rising DSO that comes from a rising best possible DSO is a business decision. A rising ADD is a process problem.
Related: Best possible DSO · Average days delinquent · DSO calculator