How Our DSO Calculator Works
Our experts are here to answer any questions you may have. We will be available to support you every step of the way while you are determining if Credit Insurance is the right choice for your organization. To use our calculator, simply:
- Input the time period for your calculations (month / quarter / year)
- Select your industry
- Add your average monthly receivables for the period and total sales
Source: The benchmarking information provided here within is proved by the Credit Research Foundation, Westminster MD.
Days Sales Outstanding
Like most accounting metrics, Days Sales Outstanding (DSO) should be calculated more often than once a year. The more data you collect over time, the more accurate your DSO average will be.
You will want your DSO to be as close to your payment terms as possible. For example, if your company has a 90-day payment policy, you will want your DSO to be as close to 90 as possible.
There are different DSO benchmarks depending on the industry. Industry averages can play a role in determining the DSO. A good number for one industry may mean trouble for another.
As a business owner, it is important to understand the DSO parameters for your industry and to keep those in mind when calculating your DSO. If your business is collecting payments from invoices quickly and your DSO is close to your payment terms that are within the industry average, you know you are on the right path.
Closely monitoring your DSO can help you avoid cash flow issues. This is where trade credit insurance can give you the peace of mind that you will meet your financial obligations, even if your customers are delaying payments. Additionally, if you have a seasonal business, keeping a close watch safeguards long-term continuity.
If cash flow issues arise, your company should review existing payment terms. Tightening these terms helps customers pay in a timely manner, alleviating your cash flow concerns.
About Credit Research Foundation
Incorporated in 1949, the Credit Research Foundation is an independent non-profit consisting of a dynamic community of like-minded senior/executive business professionals with a vested interest in maintaining a competitive advantage in the disciplines and processes related to credit and accounts receivable management. CRF is widely recognized as the foremost educational and research organization dedicated to the credit, accounts receivable and financial management community. The foundation provides access to education, research, best practices, and dynamic solution sets through multiple distribution channels.
The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. This includes the independent credit decision process whether internal and/or customer based. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation or responsibility on the part of Atradius, including any obligation to conduct due diligence on your behalf or of any buyers. If Atradius does conduct such due diligence on any buyers, it is only for the purpose of its own underwriting.
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