article thumbnail

Moving Beyond DSO

Your Virtual Credit Manager

(Photo by Carlos Muza on Unsplash ) A Framework for Choosing Suitable AR Metrics Businesses should carefully assess their specific needs, objectives, and operating context when selecting metrics for accounts receivable (AR) performance measurement. Like any metric, DSO has limitations.

DSO 130
article thumbnail

“Must Have” Metrics for Receivables Management

Your Virtual Credit Manager

Since payment of Accounts Receivables (AR) is the primary source of regular cash inflows for most companies, you need to also track your AR to not only maintain its health as well as to better manage it and ensure maximum cash inflow. It is a measure of AR turnover.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

Don't Leave Converting Sales into Cash to Chance

Your Virtual Credit Manager

If your sales are consummated via payment at the point of sale, which may involve “pay with order” or “pay on delivery” protocols involving a credit card or an online e-payment product, managing Accounts Receivable (AR) will not be big issue for you.

DSO 130
article thumbnail

A Complete Guide to Average Collection Period Formula with Example

Emagia

The average collection period is an important accounting metric that evaluates a company’s ability to manage its accounts receivable (AR) effectively. The average collection period is the length of time it takes for a company to receive payment from its customers for accounts receivable (AR).

article thumbnail

7 Strategies to Reduce DSO and Improve Cash Flow

The Esker Blog

Days Sales Outstanding (DSO) is a common measure for how long it takes a company to collect on an invoice. The goal is to reduce DSO to have the lowest DSO possible and quickly recover payment on accounts receivable (AR). DSO = ($125,000 / $950,000) × 365 days = 48.

DSO 98
article thumbnail

Evidence It's Time to Adjust Your Collection Practices

Your Virtual Credit Manager

As you review your metrics, here are five signs that there may be a problem with your collection practices: DSO Is Rising: Days Sales Outstanding is the most common metric for measuring accounts receivable (AR) performance. If DSO is rising, you are falling behind.

DSO 130