How To Calculate Average Days Sales Outstanding in Oracle EBS | 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 in turn can help you manage your cash flow and identify potential issues with your accounts receivable. While there are many ways to calculate DSO, this article will focus on how to do it in Oracle EBS.

What Is Average Days Sales Outstanding?

Before we dive into the specifics of calculating DSO in Oracle EBS, let's first define what it is. DSO is a measure of how long it takes for a business to collect payment 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 business to collect payment on its invoices.

For example, if a business has $100,000 in accounts receivable and its average daily sales are $10,000, its DSO would be 10 days. This means it takes the business an average of 10 days to collect payment on its invoices.

When Is It Valuable To Calculate Average Days Sales Outstanding?

Calculating DSO is valuable for any business that wants to manage its cash flow and improve its accounts receivable process. By understanding how long it takes for customers to pay their invoices, businesses can identify potential issues and take steps to improve their collections process.

For example, if a business has a high DSO, it may indicate that customers are taking too long to pay their invoices. This can lead to cash flow issues and make it difficult for the business to pay its own bills on time. By identifying this issue, the business can take steps to improve its collections process, such as offering discounts for early payment or implementing stricter payment terms.

On the other hand, if a business has a low DSO, it may indicate that the business is doing a good job of collecting payment on its invoices. This can help the business manage its cash flow more effectively and ensure that it has the funds it needs to operate.

In summary, calculating DSO is a valuable metric for any business that wants to manage its cash flow and improve its accounts receivable process. By understanding how long it takes for customers to pay their invoices, businesses can identify potential issues and take steps to improve their collections process.

How Do You Calculate Average Days Sales Outstanding in Oracle EBS

Oracle EBS 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 EBS 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 EBS, 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 EBS 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 EBS 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.