How To Calculate DSO in AccountingSeed | Arithmix

Learn how to calculate your Days Sales Outstanding (DSO) in AccountingSeed with our step-by-step guide. Improve your cash flow management and gain better insights into your business finances. Start optimizing your accounting processes today.

Calculating DSO (Days Sales Outstanding) in AccountingSeed is a simple and effective way to measure the efficiency of your accounts receivable process. By knowing your DSO, you can determine how long it takes for your company to collect payments from customers and identify any areas for improvement. Here's how to calculate DSO in AccountingSeed:

1. First, you need to gather your accounts receivable data. This includes the total amount of outstanding invoices and the date each invoice was issued.
2. Next, you'll need to determine your average daily sales. To do this, divide your total annual sales by 365 (or the number of days in the year).
3. Now, you can calculate your DSO by dividing your accounts receivable balance by your average daily sales. The result is the number of days it takes for your company to collect payments from customers.

It's important to note that DSO is just one metric to measure the efficiency of your accounts receivable process. It's also important to consider other factors such as credit policies, payment terms, and customer relationships.

What Is DSO?

DSO, or Days Sales Outstanding, is a financial metric that measures the average number of days it takes for a company to collect payments from customers after a sale has been made. It's a key indicator of a company's cash flow and liquidity, as well as its ability to manage its accounts receivable process effectively.

DSO is calculated by dividing the total accounts receivable balance by the average daily sales. The result is the number of days it takes for a company to collect payments from customers.

DSO is an important metric for businesses of all sizes and industries. It can help identify areas for improvement in the accounts receivable process, such as slow-paying customers or inefficient billing procedures.

When Is It Valuable To Calculate DSO?

Calculating DSO is valuable for any business that wants to improve its cash flow and manage its accounts receivable process more effectively. It's particularly useful for businesses that have a high volume of credit sales or a large number of customers with varying payment terms.

DSO can help businesses identify areas for improvement in the accounts receivable process, such as slow-paying customers or inefficient billing procedures. By reducing DSO, businesses can improve their cash flow and increase their liquidity, which can help them invest in growth opportunities and weather economic downturns.

Overall, calculating DSO is a valuable tool for any business that wants to improve its financial performance and manage its accounts receivable process more effectively.

How Do You Calculate DSO in AccountingSeed

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

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.