Calculating Days Sales Outstanding (DSO) also known as accounts receivable turnover is vital in determining the financial health of your company. It is a measure of how fast your customers pay your invoices. Calculating DSO (accounts receivable turnover) is a simple equation that should be performed at least once a quarter.
Maintaining sufficient cash flow to pay expenses is critical to your company’s financial health. Day Sales Outstanding is a critical element in the calculation to forecast your cash flow. Further, it clearly indicates potential credit risks as they develop.
Calculating Days of Sales Outstanding:
- Know the math: Calculating DSO, a simple equation that shows your average number of days your receivables are outstanding.
- Monitor the numbers: The speed with which your trucking company converts invoices into cash can have a tremendous impact on your business. Track the DSO frequently on a trend line and keep it in your comfort zone.
- When your DSO rises above your comfort zone a growing number of trucking companies are turning to Invoice Factoring to improve cash flow.
Benefits of Invoice Factoring Include:
- Same day funding
- Accurate & efficient Accounts Receivable Management
- Free credit reports
- Secure online access to view your account, 24/7
- Regular and easy to understand reporting to monitor the status of your account