# How To Calculate Average Days Sales Outstanding in Sage Contractor | Arithmix

Learn how to calculate Average Days Sales Outstanding (DSO) in Sage Contractor with our step-by-step guide. Improve your cash flow management and gain insights into your business's financial health.

Calculating the average days sales outstanding (DSO) in Sage Contractor can help you understand how long it takes for your customers to pay their invoices. This metric is important for managing your cash flow and identifying potential issues with collections. Here's how to calculate it:

1. First, determine your total accounts receivable balance. This is the amount of money owed to you by your customers.
2. Next, calculate your total credit sales for a given period. This is the amount of money you've earned from sales that were made on credit.
3. Divide your accounts receivable balance by your total credit sales, then multiply by the number of days in the period you're measuring. For example, if you're measuring DSO for a month, multiply by 30. This will give you your average DSO.

It's important to note that DSO is just one metric for measuring your collections performance. You may also want to consider other factors, such as your aging report and your collection efforts.

## What Is Average Days Sales Outstanding?

DSO is a measure of how long it takes for your customers to pay their invoices. It's calculated by dividing your accounts receivable balance by your total credit sales, then multiplying by the number of days in the period you're measuring. The resulting number represents the average number of days it takes for your customers to pay their invoices.

DSO is an important metric for managing your cash flow and identifying potential issues with collections. A high DSO can indicate that you're not collecting payments from customers in a timely manner, which can impact your ability to pay bills and invest in your business.

## When Is It Valuable To Calculate Average Days Sales Outstanding?

Calculating your average DSO can be valuable in a variety of situations. For example:

• If you're experiencing cash flow issues, calculating your DSO can help you identify whether slow collections are contributing to the problem.
• If you're considering offering credit terms to customers, calculating your DSO can help you determine whether you can afford to do so.

## How Do You Calculate Average Days Sales Outstanding in Sage Contractor

Sage Contractor 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 Sage Contractor 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 Sage Contractor, 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.