How To Calculate Days Sales Outstanding in SAP | Arithmix
Learn how to calculate Days Sales Outstanding (DSO) in SAP with this comprehensive guide. Discover the key metrics and techniques to optimize your cash flow and improve your business performance.
Calculating Days Sales Outstanding (DSO) is an important metric for any business looking to manage its cash flow effectively. It is a measure of how long it takes for a company to collect payment from its customers after a sale has been made. In this article, we will explore what DSO is, why it is valuable to calculate it, and how to do so in SAP.
What Is Days Sales Outstanding?
Days Sales Outstanding is a financial metric that measures the average number of days it takes for a company to collect payment from its customers after a sale has been made. It is calculated by dividing the total accounts receivable by the average daily sales. The resulting number represents the number of days it takes for a company to collect payment from its customers.
For example, if a company has $100,000 in accounts receivable and its average daily sales are $10,000, its DSO would be 10 days. This means that it takes the company an average of 10 days to collect payment from its customers after a sale has been made.
When Is It Valuable To Calculate Days Sales Outstanding?
Calculating DSO is valuable for any business that wants to manage its cash flow effectively. By knowing how long it takes for customers to pay, a company can better plan its cash flow and ensure that it has enough cash on hand to meet its financial obligations.
DSO is also a useful metric for identifying potential problems with a company's accounts receivable. If DSO is increasing over time, it may indicate that customers are taking longer to pay or that there are issues with the company's invoicing or collections processes.
How To Calculate Days Sales Outstanding in SAP
To calculate DSO in SAP, you will need to follow these steps:
- Run a report to gather the total accounts receivable for the period you are interested in.
- Run a report to gather the total sales for the same period.
- Calculate the average daily sales by dividing the total sales by the number of days in the period.
- Divide the total accounts receivable by the average daily sales to get the DSO.
Once you have calculated the DSO, you can use this metric to monitor your cash flow and identify any potential issues with your accounts receivable. By keeping a close eye on your DSO, you can ensure that your business has the cash it needs to operate effectively and meet its financial obligations.
How Do You Calculate Days Sales Outstanding in SAP
SAP 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 SAP 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 SAP, 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 SAP 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 SAP 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.Use Arithmix free