How To Calculate Average Days Sales Outstanding in TallyPrime | Arithmix

Calculating average days sales outstanding is an important metric for any business owner or financial analyst. It can help you understand how quickly your customers are paying their bills and how efficiently your business is managing its cash flow. In this article, we'll walk you through the steps to calculate average days sales outstanding using TallyPrime.

What Is Average Days Sales Outstanding?

Before we dive into the calculation process, let's define what average days sales outstanding means. Average days sales outstanding (DSO) is a financial metric that measures the average number of days it takes for a business to collect payment from its customers after a sale has been made. It's calculated by dividing the total accounts receivable by the average daily sales.

DSO is an important metric because it can help you identify potential cash flow problems. If your DSO is increasing, it may indicate that your customers are taking longer to pay their bills, which can put a strain on your cash flow. On the other hand, if your DSO is decreasing, it may indicate that your business is doing a better job of managing its accounts receivable.

When Is It Valuable To Calculate Average Days Sales Outstanding?

Calculating average days sales outstanding is valuable for any business that extends credit to its customers. It's particularly useful for businesses that have a large volume of accounts receivable or that offer payment terms that extend beyond 30 days. By monitoring your DSO, you can identify trends and take action to improve your cash flow.

For example, if you notice that your DSO is increasing, you may want to review your credit policies and procedures to ensure that you're extending credit to customers who are likely to pay on time. You may also want to consider offering incentives for early payment or implementing a more aggressive collections process.

On the other hand, if your DSO is decreasing, you may want to review your credit policies and procedures to ensure that you're not extending credit to customers who are unlikely to pay on time. You may also want to consider offering more flexible payment terms to encourage customers to pay more quickly.

In conclusion, calculating average days sales outstanding is an important metric for any business that extends credit to its customers. By monitoring your DSO, you can identify trends and take action to improve your cash flow. With TallyPrime, calculating your DSO is quick and easy, allowing you to focus on growing your business.

How Do You Calculate Average Days Sales Outstanding in TallyPrime

TallyPrime 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 TallyPrime 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 TallyPrime, 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 TallyPrime 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 TallyPrime 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.