How To Calculate DSO in Kinetic | Arithmix

DSO, or Days Sales Outstanding, is a metric used to measure the average number of days it takes for a company to collect payment after a sale has been made. This metric is important because it can provide insight into a company's cash flow and financial health. In this article, we will discuss how to calculate DSO in Kinetic, a popular accounting software.

What Is DSO?

DSO is a financial metric that measures the average number of days it takes for a company to collect payment after a sale has been made. It is calculated by dividing the total accounts receivable by the total credit sales and then multiplying the result by the number of days in the period being measured. A lower DSO indicates that a company is collecting payments more quickly and efficiently, while a higher DSO may indicate that a company is struggling to collect payments and may have cash flow issues.

DSO is an important metric for businesses of all sizes because it can provide insight into their cash flow and financial health. By tracking DSO over time, businesses can identify trends and make adjustments to their collections processes to improve their cash flow and financial stability.

When Is It Valuable To Calculate DSO?

Calculating DSO is valuable for businesses of all sizes, but it is especially important for those that rely on a steady stream of cash flow to operate. For example, small businesses that have limited cash reserves may be more vulnerable to cash flow issues if they are not collecting payments in a timely manner. By tracking DSO, these businesses can identify potential cash flow issues early and take steps to address them before they become a problem.

Additionally, businesses that offer credit terms to their customers may find DSO to be a valuable metric. By tracking DSO, these businesses can identify customers who are consistently slow to pay and adjust their credit terms or collections processes accordingly. This can help them to improve their cash flow and reduce the risk of bad debt.

In conclusion, calculating DSO is an important metric for businesses of all sizes. By tracking DSO over time, businesses can identify trends and make adjustments to their collections processes to improve their cash flow and financial stability. Whether you are a small business owner or a large corporation, understanding and tracking your DSO can help you to make informed decisions and improve your bottom line.

How Do You Calculate DSO in Kinetic

Kinetic 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 Kinetic 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 Kinetic, 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.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating DSO in Arithmix

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

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