# How To Calculate Days Sales Outstanding in Sage | Arithmix

Learn how to calculate Days Sales Outstanding (DSO) in Sage with our step-by-step guide. Improve your cash flow management and gain valuable insights into your business's financial performance. Start optimizing your accounts receivable today.

Calculating Days Sales Outstanding (DSO) is an important metric for any business looking to manage their cash flow effectively. DSO measures the average number of days it takes for a business to collect payment from its customers after making a sale. This metric is particularly useful for businesses that offer credit terms to their customers, as it helps them understand how long it takes for their customers to pay their invoices.

DSO is calculated by dividing the total accounts receivable by the total credit sales for a given period and then multiplying the result by the number of days in that period. For example, if a business has \$100,000 in accounts receivable and \$500,000 in credit sales for a month, and the month has 30 days, the DSO would be calculated as follows:

DSO = (100,000 / 500,000) x 30 = 6 days

## What Is Days Sales Outstanding?

Days Sales Outstanding is a measure of the average number of days it takes for a business to collect payment from its customers after making a sale. This metric is important because it helps businesses understand how long it takes for their customers to pay their invoices, which in turn helps them manage their cash flow more effectively. A high DSO can indicate that a business is having trouble collecting payment from its customers, which can lead to cash flow problems and potentially even bankruptcy.

DSO is typically calculated on a monthly or quarterly basis, and it is often used in conjunction with other financial metrics such as accounts receivable turnover and cash conversion cycle to get a more complete picture of a business's financial health.

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

Calculating Days Sales Outstanding is valuable for any business that offers credit terms to its customers. By understanding how long it takes for customers to pay their invoices, businesses can better manage their cash flow and ensure that they have enough cash on hand to meet their financial obligations. DSO is particularly important for businesses that have a high volume of credit sales, as these businesses are more susceptible to cash flow problems if they are not able to collect payment from their customers in a timely manner.

DSO is also valuable for businesses that are looking to improve their financial performance. By tracking DSO over time, businesses can identify trends and make changes to their credit policies or collections processes to improve their cash flow and reduce the amount of time it takes to collect payment from their customers.

In conclusion, calculating Days Sales Outstanding is an important metric for any business that offers credit terms to its customers. By understanding how long it takes for customers to pay their invoices, businesses can better manage their cash flow and ensure that they have enough cash on hand to meet their financial obligations. DSO is a valuable tool for businesses that are looking to improve their financial performance and reduce the amount of time it takes to collect payment from their customers.

## How Do You Calculate Days Sales Outstanding in Sage

Sage 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 Sage 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, 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.