Average Days Delinquent (ADD)

Concept

Average Days Delinquent estimates how late payments arrive, on average, at the portfolio level. It is computed from aggregate balances, so it is an estimate of lateness across the ledger - not a measured mean of individual invoice lateness. Where DSO mixes your payment terms into the number (a company on NET 60 naturally shows a higher DSO than one on NET 30), ADD strips terms out: it is the gap between when invoices were due and when they were paid.

Formula: ADD = DSO - best possible DSO (BPDSO), where BPDSO is the DSO you would show if every customer paid exactly on the due date: BPDSO = (current receivables not yet due / credit sales) x days in period.

Worked example

Northwind Billing Co. again, same 30-day period ending September 30:

Total receivables at period end: $412,000
Of that, not yet due (still inside terms): $255,000
Credit sales during the period: $287,000
Period length: 30 days

BPDSO = (255,000 / 287,000) x 30 = 26.7 days.
DSO (from the DSO explainer) = 43.1 days.
ADD = 43.1 - 26.7 = 16.4 days.

Reading it: the ADD estimate of 16.4 days points to a meaningful lateness component on top of terms - as a portfolio-level estimate from aggregate balances, not a measured per-invoice figure. That lateness component is what a collections process can move; DSO alone cannot tell you whether the problem is terms, lateness, or both.

Assumptions and limits: ADD is a portfolio estimate from aggregate balances; it does not measure per-invoice lateness and can mask a few very late invoices behind many slightly late ones. BPDSO assumes everything not yet due would be paid exactly on its due date.

Calculator

Enter total receivables, the not-yet-due portion, credit sales for the SAME period, and the period length. The tool shows BPDSO, DSO and ADD with each formula segment, so terms and lateness stay separate.

Total accounts receivable at period end ($) Receivables not yet due, still inside terms ($) Credit sales during the period ($) Days in period

Where Billing Toolkit fits

Moving ADD means acting on overdue invoices: dunning schedules, retry logic, payment method updates. As Billing Toolkit's capabilities ship and are verified, this page can show where those are managed. Until then this section stays informational.