![]() What Is Days Sales Outstanding (DSO)?Īs long as people have been trading goods, they have been using invoices to show outstanding debts. The result will show the average number of days it takes your company to collect payment from outstanding invoices. Insert your accounts receivable from the balance sheet and net sales over the period from your income statement, and then select the window of time you’d like to analyze. We recommend at least three months to get an accurate average. To calculate your DSO, determine the length of time you would like to analyze. Not only that, a high DSO can signal that there may be other problems within the business that need addressing. Any business that invoices customers and sets payment terms should monitor their DSO closely because the more time is spent waiting to collect cash, the more effort (read: money) is ultimately required. Days Sales Outstanding, or DSO, helps business owners assess how well they are collecting on outstanding accounts receivable.
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