To calculate Monthly Days Sales Outstanding (DSO), first determine the total credit sales for the month. Then, divide the ending accounts receivable balance by the total credit sales and multiply the result by the number of days in the month. The formula is: Monthly DSO = (Ending Accounts Receivable / Total Credit Sales) * Number of Days in the Month. This metric provides insights into the average number of days it takes for a company to collect payments from its customers during a specific month, aiding in assessing accounts receivable management efficiency.
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Autonomous O2C to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
