How To Calculate Days Sales Outstanding in Sage CRE | Arithmix

Calculating Days Sales Outstanding (DSO) is an essential metric for businesses to understand how long it takes to collect payments from their customers. It is a crucial indicator of a company's financial health and cash flow management. In this article, we will discuss what DSO is, when it is valuable to calculate it, and how to calculate it in Sage CRE.

What Is Days Sales Outstanding?

Days Sales Outstanding (DSO) is a financial metric that measures the average number of days it takes a company to collect payment from its customers. It is calculated by dividing the accounts receivable by the average daily sales. In other words, it shows how long it takes for a company to convert its sales into cash.

DSO is an essential metric for businesses to monitor because it provides insight into their cash flow management. A high DSO indicates that a company is taking longer to collect payments, which can lead to cash flow problems. On the other hand, a low DSO indicates that a company is collecting payments quickly, which can improve its cash flow position.

When Is It Valuable To Calculate Days Sales Outstanding?

Calculating DSO is valuable for businesses of all sizes and industries. It is especially important for businesses that offer credit terms to their customers. By monitoring DSO, businesses can identify trends in their payment collection process and take steps to improve it. For example, if a company's DSO is increasing, it may indicate that its credit policies need to be tightened, or it may need to follow up with customers who are slow to pay.

DSO is also valuable for businesses that are looking to improve their cash flow management. By reducing DSO, a company can improve its cash flow position, which can help it to invest in growth opportunities or pay off debt.

How to Calculate Days Sales Outstanding in Sage CRE

To calculate DSO in Sage CRE, follow these steps:

1. Go to the Accounts Receivable module and select the Reports tab.
2. Select the Aging Report.
3. Select the date range for the report and run it.
4. Calculate the total accounts receivable for the date range.
5. Calculate the average daily sales for the same date range by dividing the total sales by the number of days in the range.
6. Divide the total accounts receivable by the average daily sales to get the DSO.

By following these steps, you can easily calculate DSO in Sage CRE and use it to monitor your cash flow management and improve your payment collection process.

How Do You Calculate Days Sales Outstanding in Sage CRE

Sage CRE 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 CRE 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 CRE, 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 Sage CRE 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 Sage CRE 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.