AR Days Calculator (Average Collection Period)

AR days (accounts receivable days) is the average number of days a business needs to collect receivables from customers after a credit sale occurs. The smaller the number, the faster receivables turn into cash.

The AR days formula is (average receivables ÷ net credit sales) × days in period. Average receivables = (beginning receivables + ending receivables) ÷ 2. Example: average receivables Rp500,000,000 with credit sales Rp3,000,000,000 over 365 days gives AR days = (Rp500,000,000 ÷ Rp3,000,000,000) × 365 = 60.83 days.

There is no difference — average collection period is another name for AR days. Both use the same formula and produce the same number. The calculator above computes both at once; the result carries two labels to be easy to find via search.

DSO is often used as a synonym for AR days, but there is nuance: some analysts compute DSO from total sales (including cash), not just credit sales, or use ending receivables instead of the average. These definition differences can shift results by several days. When comparing across periods or companies, make sure everyone uses the same definition. Want to see DSO as part of the working capital cycle? See our Cash Conversion Cycle Calculator.

As a general guideline (not an official standard): under 30 days is excellent, 30–45 days is healthy and normal for many B2B businesses, 45–60 days warrants caution as it starts tying up working capital, and above 60 days needs serious attention to payment terms and collection processes. The fairest benchmark is your industry average and the payment terms you offer — 45 AR days is healthy if your terms are net-45, but poor if your terms are net-14.

Both are correct as long as you are consistent. 365 days is the common standard; 360 days is used by some banks and analysts as a "banker's year" for simpler math. The difference is small: the example above gives 60.83 days with 365 days and 60.00 days with 360 days. The calculator above offers 365, 360, 90, and 30-day options.

The most direct ways: shorten payment terms, ask for down payments or deposits, offer early-payment discounts (e.g. 2/10 net 30), send invoices as soon as work is done, enable automatic due-date reminders, apply late fees, and screen new customers' creditworthiness before granting terms.

Each AR day means one day of sales whose cash is still stuck in customer receivables. Tied-up cash equals the average receivables balance — in the example above, Rp500,000,000 of cash sits in receivables. The simulation: cutting AR days by 10 days (from 60.83 to 50.83 days) frees about Rp82,191,781 in cash, and the target receivables balance drops to Rp417,808,219. Try the what-if simulator above with your business numbers.

AR days is an average, so it can hide distribution: most customers pay on time while a few are hugely overdue. The metric is also affected by seasonality (end-of-period sales spikes), cash vs. credit mix, and does not capture receivables that ultimately go uncollected. Use it together with a receivables aging schedule for the full picture.