One of the most important KPI’s (Key Performance Indicators) that a CFO can track is the number of days it takes to collect your receivables in a given amount of time, your Days Sales Outstanding or (DSO). A critical indicator of your company’s financial health, DSO shows both the age of your company’s accounts receivable and the average time it takes to turn those receivables into cash. In other words, DSO reveals how many days worth of sales are outstanding and unpaid within a specific period.
As a “Rule of Thumb,” your DSO delinquent balances should not exceed 33% to 50% of your selling terms. If terms are 30 days, then an acceptable DSO is 40 to 45 days. A DSO receivable at 15 days past terms is a collection candidate. Remember, the less money that is being tied up in accounts receivable the more money you have available for company investment or dividends.
Shrink DSO with Dynamics GP Electronic Billing
Additional benefits of electronic invoicing include:
- Reduce processing costs
- Increase efficiency and productivity
- Compress invoice receipt-to-pay cycle
- Reduce errors and accelerate discrepancy resolution
- Minimize fraud and duplicate invoices
- Increase early payment discount capture
- Strengthen vendor relations
- Improve cash flow forecasting abilities
- Improve visibility and control
Electronic billing is just one way to reduce your DSO and increase your company’s cash flow and efficiency. To find out how we can help you monitor your company’s performance and find creative ways to build performance, contact Gary at [email protected] or 866-960-0001 x207.
by KTL Solutions,