DSO is a measurement of the average number of days that a company takes to collect revenue after a sale has been made.
The Days Sales Outstanding (DSO) figure is an index of the relationship between outstanding receivables and sales achieved over a given period. The DSO analysis provides general information about the number of days on average that customers take to pay invoices. A low DSO number means that it takes a company fewer days to collect its accounts receivable. A high DSO number shows that a company is selling its product to customers on credit and taking longer to collect money.
Days Sales Outstanding, or DSO, is calculated as: Total Outstanding Receivables at the end of the period analyzed divided by Total Credit Sales for the period analyzed (typically 90 or 365 days), times the number of days in the period analyzed. That is DSO = (Receivables / Sales)*Days.
The KPI will be monitored by Accounts Receivable department in each local market and also senior management at Regional level in order to monitor and control the cash flow and liquidity of the different legal entities which make up the Company. DSO can vary from month to month, and over the course of a year with a company’s seasonal business cycle.
Unlike standard method of calculation of DSO, Rapid DSO Analytics Tool follows Exhaustion Method for calculating DSO with an iterative process and look backwards of account receivables and results the DSO instantaneously. This differs from the standard DSO calculation.
Rapid DSO Analytics tool takes the Accounts Receivables data in any format with the historical data included. The tool then iterates through the historical Account Receivables and results the most accurate DSO and DSO Trend Analysis instantly for any fiscal period.Rapid DSO Analytics tool will help achieve the business, the most accurate DSO instantly and DSO trend analysis instantaneously with interactive charts and graphs.