DSO: A Critical Measure Of Success

Posted by Robin Sands on 02/09/2016

Days Sales Outstanding (DSO) expresses the average number of days it takes a company to convert its Accounts receivables into cash. It is one of the most widely used measures employed by credit professionals to analyse the success of their efforts.

In a survey of Finance team members across a range of industries, feedback was collected on the factors which they see that drive or hinder accurate and reliable processes.

Almost all of the interviewees involved in the research defined success based on their ability to reduce bad debt and minimize DSO (Days Sales Outstanding).

Issues they faced included:

•How quickly was the invoice delivered to the customer?

•Did the right invoice go to the right customer?

•Did the customer receive the invoice?

•Were there questions about the invoice?

•How long did it take customers to process the invoice?

•How long did it take customers to pay the invoice?

Every delay through the life of an invoice costs companies money. Of course, many businesses have found that choosing electronic delivery and payment systems both speed up the process and reduce problems along the entire path. Customers also appreciate the added convenience of e-invoicing, making it a win for both customers and suppliers.

With that in mind, be sure to evaluate the latest fintech solutions which can help reduce DSO. Cloud computing solutions like Link4 can speed up the rate as an invoice goes through its life cycle. Customers can process invoices faster, leading to more invoices being paid on time. Cash flow can increase and DSO can be reduced, leading to a more successful Finance team.

Share on LinkedIn