{"id":43411,"date":"2024-12-12T16:56:46","date_gmt":"2024-12-12T15:56:46","guid":{"rendered":"https:\/\/creditdevice.com\/kennisbank-overzicht\/dso-days-sales-outstanding\/"},"modified":"2024-12-12T16:56:46","modified_gmt":"2024-12-12T15:56:46","slug":"dso-days-sales-outstanding","status":"publish","type":"kennisbank","link":"https:\/\/creditdevice.com\/en\/kennisbank-overzicht\/dso-days-sales-outstanding\/","title":{"rendered":"DSO (Days Sales Outstanding)."},"content":{"rendered":"
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Days sales outstanding, also known as DSO, is the most widely used measurement tool in accounts receivable management. Unfortunately, everyone has to deal with it from time to time: overdue invoices. In the Netherlands, the average DSO among small and medium-sized companies is 45 days. If your payment term is 30 days, this already indicates that a large proportion of your invoices are paid too late. Fortunately, using a DSO formula, you can easily calculate your DSO and take timely action to prevent payment problems. <\/p>\n<\/div>\n<\/div>\n

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What exactly does Days Sales Outstanding entail?<\/h2>\n<\/div>\n<\/div>\n
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DSO ratio is the average number of days a company has to wait for its money after you sell a product or service. DSO is calculated by calculating from the time an invoice is sent to a debtor until the invoice is actually paid. By calculating your DSO monthly, you can more easily answer the questions below. <\/div>\n<\/div>\n<\/div>\n
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  • <\/i> How quickly do my customers pay?<\/span><\/li>\n
  • <\/i> Do I have my accounts receivable management in order?<\/span><\/li>\n
  • <\/i> Are my customers creditworthy?<\/span><\/li>\n
  • <\/i> Are my customers satisfied?<\/span><\/li>\n<\/ul>\n<\/div>\n<\/div>\n
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    Calculate DSO<\/h2>\n<\/div>\n<\/div>\n
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    Lower your DSO? Or have you improved your credit management processes and want to know how this affects your DSO? Then calculate your DSO using one of the formulas below. <\/div>\n<\/div>\n<\/div>\n
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      Per month calculation<\/strong>
      \nDays Sales Outstanding (DSO) = (outstanding amount of invoices end of month\/month sales) x 30 days<\/span><\/p><\/blockquote>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

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        Calculate by year<\/strong>
        \nDays Sales Outstanding (DSO) = (outstanding amount of invoices end of year\/year sales) x 365 days<\/span><\/p><\/blockquote>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

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          This is what a DSO calculation looks likeYou<\/strong>would like to calculate the DSO, for example, for the month of May. At the end of May there is a total of 325,000 euros outstanding. Your monthly turnover is 337,500 euros.Using the monthly formula, you arrive at a DSO of 30 days. (325,000\/337,500) x 31 days * = 29.85 days (rounded 30 days) <\/span><\/p><\/blockquote>\n<\/li>\n<\/ul>\n

          *number depends on the number of days in the month<\/span><\/p>\n<\/div>\n

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          \"DSO\"<\/p>\n<\/div>\n<\/div>\n

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          High or low DSO<\/h2>\n<\/div>\n<\/div>\n
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          Managing and reducing the DSO is often the job of the credit & control department. If you have a low DSO (-well- under 45 days), it indicates that you, as a company, are close to your debtors and collect your invoices quickly. A high DSO (-well- above 45 days), on the other hand, shows that you take longer to collect your money. This can obviously be a choice but often indicates the credit management policy needs improvement. <\/p>\n<\/div>\n<\/div>\n<\/div>\n

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          Low<\/h3>\n<\/div>\n<\/div>\n
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          So a low DSO means that your debtors are generally paying outstanding invoices quickly. You are then likely to have a healthy cash flow. A low DSO can also be an advantage when you want to take out a loan from the bank. In their eyes, you then represent a low risk. However, it is important to know that a DSO that is too low does not have to be positive. Your policy may be too strict and you may be rejecting deals unnecessarily to avoid risk. <\/p>\n<\/div>\n<\/div>\n<\/div>\n

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          High<\/h3>\n<\/div>\n<\/div>\n
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          A high DSO means that your debtors are paying their invoices late or far too late which can lead to cash flow problems. Your company may run into financial trouble and even bankruptcy. In addition, banks are less open to extending credit. <\/p>\n<\/div>\n<\/div>\n<\/div>\n

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          Too high DSO, how can it be among other things?<\/h3>\n<\/div>\n<\/div>\n
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