How To Calculate Average Days Sales Outstanding in Oracle | Arithmix

Calculating average days sales outstanding (DSO) is an important metric for any business looking to manage its cash flow effectively. It is a measure of how long it takes for a company to collect payment from its customers after a sale has been made. In this article, we will explore what average DSO is, why it is valuable to calculate it, and how to calculate it using Oracle.

What Is Average Days Sales Outstanding?

As mentioned earlier, average DSO is a measure of how long it takes for a company to collect payment from its customers after a sale has been made. It is calculated by dividing the total accounts receivable by the average daily sales. The result is the number of days it takes for a company to collect payment from its customers on average.

For example, if a company has $100,000 in accounts receivable and its average daily sales are $10,000, its average DSO would be 10 days. This means that it takes the company an average of 10 days to collect payment from its customers after a sale has been made.

When Is It Valuable To Calculate Average Days Sales Outstanding?

Calculating average DSO is valuable for any business that wants to manage its cash flow effectively. It helps businesses to identify potential cash flow problems and take action to address them before they become a serious issue.

For example, if a company's average DSO is increasing over time, it may indicate that customers are taking longer to pay their invoices. This could be a sign of financial distress or a lack of creditworthiness on the part of the customers. By identifying this trend early on, the company can take steps to address the issue, such as tightening credit policies or offering incentives for early payment.

How to Calculate Average Days Sales Outstanding

To calculate average DSO using Oracle, you will need to follow these steps:

1. Run a report that shows the total accounts receivable for a given period.
2. Run a report that shows the total sales for the same period.
3. Calculate the average daily sales by dividing the total sales by the number of days in the period.
4. Divide the total accounts receivable by the average daily sales to get the average DSO.

It is important to note that this calculation is only as accurate as the data that is used to generate it. Therefore, it is important to ensure that your data is accurate and up-to-date before running this calculation.

In conclusion, calculating average DSO is an important metric for any business looking to manage its cash flow effectively. By understanding what it is, why it is valuable, and how to calculate it using Oracle, businesses can take proactive steps to address potential cash flow problems and ensure their financial stability.

How Do You Calculate Average Days Sales Outstanding in Oracle

Oracle 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 Oracle 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 Oracle, 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 Oracle 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 Oracle 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.