Glossary · Receivables metrics
Average days delinquent (ADD)
Also called Days delinquent sales outstanding
Average days delinquent (ADD) is the number of days, on average, that customers pay after the due date. It is DSO minus Best Possible DSO.
ADD isolates lateness. DSO mixes two things — the terms you give and how late customers pay beyond them — and ADD keeps only the second. A rising ADD with flat terms means collections are slipping.
Because it is measured in days, ADD is easy to set targets around and easy to explain: “our customers pay, on average, eight days late.” Track it monthly alongside DSO.
ADD near zero means customers pay on time and DSO is all terms. A high ADD with low BPDSO means the terms are fine and the follow-up is where to act.
Formula
ADD = DSO − Best Possible DSO
Example
A firm’s DSO is 41 days and its Best Possible DSO is 29. ADD = 12 days: its customers pay, on average, 12 days after the due date.