Accounts Receivable Turnover Calculator
Measure how efficiently your business collects payments from customers. Enter net credit sales and your AR balances to see how many times you collect receivables per year and your average collection period in days.
Accounts receivable turnover measures how many times a company collects its average accounts receivable balance during a period. The formula is: Net Credit Sales / Average Accounts Receivable. A higher ratio means faster collection.
For example, a company with $1,200,000 in net credit sales and average AR of $175,000 has a turnover ratio of 6.86. That means the company collects its outstanding receivables about 6.86 times per year, or roughly every 53 days (365 / 6.86).
Days Sales Outstanding (DSO)
DSO is the flip side of turnover: it tells you the average number of days it takes to collect payment after a sale. DSO = 365 / AR Turnover Ratio. Lower is better. If your payment terms are Net 30 but your DSO is 53 days, customers are paying an average of 23 days late.
Benchmarking Your AR Turnover
Good turnover depends on your payment terms and industry:
- Net 30 terms: Target DSO of 30-40 days (turnover of 9-12)
- Net 60 terms: Target DSO of 60-70 days (turnover of 5-6)
- Retail/restaurant: Very high turnover since most sales are cash or card
- B2B services: Lower turnover, DSO of 45-60 days is common
Tracking AR turnover quarterly helps you spot collection problems early. A declining turnover ratio means customers are taking longer to pay, which can create cash flow issues even if revenue is growing.