Days in accounts receivable
Days in A/R is the average number of days it takes to collect receivables, a core measure of revenue-cycle speed.
Updated
Days in accounts receivable (often abbreviated DAR or DSO-for-A/R) is the average number of days it takes a practice to collect its receivables. It is calculated by dividing total accounts receivable by average daily charges (or by average daily net revenue), expressing the receivable balance as a number of days of revenue.
It is the standard single-number measure of revenue-cycle speed: a lower number means cash is coming in faster and less money is tied up in receivables. The ratio is sensitive to both the inflow (charges) and the outflow (collections), so a change can reflect either faster collection or a drop in volume rather than improved performance alone.
In practice
Days in A/R is best read as a trend rather than a single point, and alongside A/R aging, because the average can mask a build-up in the oldest buckets that a healthy average would hide. A rising days-in-A/R figure with a stable aging distribution means something different from a rising figure driven by the over-120 bucket growing.
Commonly confused with
- Accounts receivable (A/R) aging: Days in A/R is a single average expressed in days; A/R aging is the distribution of balances across time buckets. The average can hide what the distribution shows, so the two are read together.