How To Calculate Days Sales Outstanding in Quickbooks Online | Arithmix

Calculating Days Sales Outstanding (DSO) is an important metric for any business owner who wants to understand their cash flow and financial health. 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 accounts receivable balance by the average daily sales. In this article, we will discuss what DSO is, when it is valuable to calculate DSO, and how to calculate DSO in Quickbooks Online.

What Is Days Sales Outstanding?

Days Sales Outstanding 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 an important metric because it helps businesses understand their cash flow and financial health. A high DSO means that a company is taking a long time to collect payment from its customers, which can lead to cash flow problems. A low DSO means that a company is collecting payment quickly, which can improve cash flow and financial health.

DSO is calculated by dividing the accounts receivable balance by the average daily sales. The accounts receivable balance is the total amount of money that a company is owed by its customers. The average daily sales are the total sales for a period of time divided by the number of days in that period. For example, if a company had $10,000 in sales for the month of January, and there were 31 days in January, the average daily sales would be $322.58 ($10,000/31).

When Is It Valuable To Calculate Days Sales Outstanding?

It is valuable to calculate DSO for any business that wants to understand its cash flow and financial health. DSO can help businesses identify potential cash flow problems and take steps to address them. For example, if a company has a high DSO, it may need to improve its collections process or offer incentives for customers to pay their bills on time. On the other hand, if a company has a low DSO, it may be able to negotiate better payment terms with its suppliers or invest in growth opportunities.

DSO is also valuable for benchmarking against other companies in the same industry. By comparing DSO with other companies, businesses can identify areas where they may need to improve their collections process or negotiate better payment terms with their customers.

How to Calculate Days Sales Outstanding in Quickbooks Online

To calculate DSO in Quickbooks Online, follow these steps:

1. Go to the Reports tab and select Sales.
2. Select the Sales by Customer Detail report.
3. Select the date range for the report.
4. Click on the Customize button.
5. Select the following columns: Invoice Date, Due Date, Amount, and Open Balance.
6. Click on the Run report button.
7. Export the report to Excel.
8. In Excel, calculate the average daily sales by dividing the total sales for the period by the number of days in the period.
9. Calculate the accounts receivable balance by summing the Open Balance column in the report.
10. Calculate DSO by dividing the accounts receivable balance by the average daily sales.

By following these steps, you can easily calculate DSO in Quickbooks Online and gain valuable insights into your business's cash flow and financial health.

How Do You Calculate Days Sales Outstanding in Quickbooks Online

Quickbooks Online itself isn’t naturally geared towards letting you calculate complex metrics like Days Sales Outstanding. As an alternative, teams typically use products like Arithmix to import data from Quickbooks Online 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 Quickbooks Online, combine it with data from other systems, and create calculations like 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 Days Sales Outstanding in Arithmix

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

Arithmix is designed to give you the power to build any calculations you want on top of your Quickbooks Online 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.