How To Calculate Average Days Sales Outstanding in MultiView | Arithmix

Calculating Average Days Sales Outstanding (DSO) is an important metric for any business. It helps you understand how long it takes for your customers to pay their invoices, which can have a significant impact on your cash flow. In this article, we'll explain what DSO is, why it's valuable to calculate it, and how to calculate it in MultiView.

What Is Average Days Sales Outstanding?

DSO is a financial metric that measures the average number of days it takes for a company to collect payment from its customers. It's calculated by dividing the total accounts receivable by the total credit sales for a given period and multiplying the result by the number of days in that period.

For example, if a company has $100,000 in accounts receivable and $500,000 in credit sales for a month, the DSO would be calculated as follows:

DSO = ($100,000 / $500,000) x 30 = 6 days

This means that on average, it takes the company 6 days to collect payment from its customers.

When Is It Valuable To Calculate Average Days Sales Outstanding?

Calculating DSO is valuable for any business that extends credit to its customers. It helps you understand how long it takes for your customers to pay their invoices, which can have a significant impact on your cash flow. If your DSO is high, it means that your customers are taking longer to pay, which can put a strain on your cash flow and make it more difficult to pay your own bills.

By calculating DSO regularly, you can identify trends and take action to improve your cash flow. For example, if you notice that your DSO is increasing over time, you may need to tighten your credit policies or follow up more aggressively with customers who are slow to pay.

How to Calculate Average Days Sales Outstanding in MultiView

If you're using MultiView, calculating DSO is easy. Simply follow these steps:

1. Go to the Accounts Receivable module in MultiView.
2. Select the date range for which you want to calculate DSO.
3. Click on the "Reports" tab and select "DSO Report."
4. The report will show you the total accounts receivable and credit sales for the selected period, as well as the calculated DSO.

By regularly calculating DSO in MultiView, you can stay on top of your cash flow and make informed decisions about your credit policies and customer relationships.

How Do You Calculate Average Days Sales Outstanding in MultiView

MultiView itself isn’t naturally geared towards letting you calculate complex metrics like Average Days Sales Outstanding. As an alternative, teams typically use products like Arithmix to import data from MultiView and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like MultiView, combine it with data from other systems, and create calculations like Average Days Sales Outstanding.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Average Days Sales Outstanding in Arithmix

Calculating metrics like Average Days Sales Outstanding is simple in Arithmix. Once you've created your free account, you’ll be able to import your MultiView data, and use it to create natural language formulas for metrics like Average Days Sales Outstanding.

Arithmix is designed to give you the power to build any calculations you want on top of your MultiView data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.