Optimizing Days Sales Outstanding With An Order To Cash Software
Days Sales Outstanding Equation
Every executive in charge of evaluating and utilizing an Order To Cash Softwaresolution can see tremendous savings and advances with the right tool. Days Sales Outstanding equation is complex way of measuring collections efficiency, and its optimization is essential to effectively managing accounts receivable. By using an OTC software, executives can use their time more efficiently and improve their understanding of their financial data.
What Is Days Sales Outstanding (DSO)?
Days Sales Outstanding is useful equation for analyzing customer payments that capture customer payment behavior patterns. DSO can also help companies manage customer payment deadlines and collections on timely basis. This equation calculates the number of days it takes for customers to pay their invoices after they receive them. Therefore, lower DSO rate represents better collections process. The formula used to calculate DSO is: Net Credit isales Accounts Receivable Number of Days in the Period.
How Can an Order To Cash System Help to Optimize DSO?
An Order To Cash system, implemented correctly, can help an executive optimize the Days Sales Outstanding equation by increasing efficiencies and improving visibility across the companies receivables accounts. OTC Software helps improve visibility, reconciliation, collection and aging of receivables by streamlining the entire accounts receivable process. An OTC system allows executives to quickly and easily track and manage customer payments, billing and collections with automated processes. This eliminates manual data entry, paperwork and inefficient processes which result in more efficient collections and improved DSO.
Functional Benefits of an Order To Cash System
The benefits of an Order To Cash system are numerous and include, but are not limited to, the following:
? Automated Collection Reporting an OTC system will automatically capture and store customer payment details in real-time and produce highly detailed collection reports. These reports provide clear picture of past, present and future collections and help in creating an accurate DSO calculation.
? Automated Invoicing and Billing an OTC system will streamline the billing process by automatically generating invoices, reconciling payment discrepancies, and sending reminders to customers when payments are late.
? Enhanced Security an OTC system ensures that customer and company data is secured at all times, preventing any potential data breaches.
? Increased Analytics and Business Intelligence an OTC system can provide executives with insights into customer behaviors and trends, enabling them to better manage collections.
Conclusion
An effective Order To Cash Softwaresolution is invaluable when it comes to optimizing Days Sales Outstanding. An automated process can help reduce manual effort and lag time and improve collections efficiencies and reporting accuracy. Such system will enable executives to have better understanding of their accounts receivable and ultimately lead to better financial picture for the company.
