Days Sales Outstanding: Be responsive to everyone’s differences
Analyzing different areas of your accounts receivable functions is extremely important when ensuring your payment plans don’t have any problems. Checking your credit approval process (here) and your collections process (here) can help set how consistent clients are with payments. Now, we’ll be covering Days Sales Outstanding (DSO) and how it can help you set pricing and credit limits for each customer.
Evaluate your customers by DSO. Imagine knowing, by the client, how long it takes, on average, for them to pay you after you make the sale? What could you do with information that tells you, on average, that Customer A pays you in 20 days while Customer B pays you in 65 days? Would you continue to charge them the same price? Would you invoice sooner or advance bill certain clients in order to shorten the DSO? Would you update your cash flow projections to provide a more realistic picture of the impact that longer paying customers makes on your ability to pay your expenses? Most of our clients find this information extremely valuable in making decisions about pricing and credit limits to customers based on DSO and they find it useful in predicting cash flow.
With our approach, your accounting team and accounts receivable function should be paying for itself in the value, consistently applied processes, proactive approach, and predictive tools and information they provide the organization. If your organization is not doing this, Ask CFOSP How.
Shannon Carbone, CEO of CFO Strategic Partners
Shannon Carbone is the Founder and CEO of CFO Strategic Partners, a financial consulting firm headquartered in Central Florida offering CFO on demand, outsourced CFO, virtual CFO, and comprehensive accounting services for clients with either short-term or long term needs since 1999.
“Our organization was navigating an intense transition involving our government funding partners and public officials. Without the help of CFOSP, we would have experienced severe financial impacts and certainly lost donor confidence.”
CEO Central Florida Historical Society
“I applaud the stellar support provided by our CFO in embracing and understanding our budget priorities and operations that entail hundreds of financial transactions each month and several millions of dollars in expenditures annually. The nature of our business is very complex, yet your firm did not shy away from the challenge of establishing accounting processes and procedures that will sustain us well into the future.”
Kissimmee Chamber of Commerce, Experience Kissimmee
“…The services they have provided have tripled my bottom line, giving us serious profit levels that have helped fund company growth…”
President, Engineering Firm
“There is no limit to the value of the collective experience that the CFO team brings to the table. Their expertise in debt management, tax reporting, cost of funds, and in-depth analysis has been more than I could have hoped for…”
CEO/President, Hotel Corporation
“Since we began working with CFO Strategic Partners, we’re in the best financial position we’ve ever been in… CFO gives my staff and myself financial peace of mind so we can focus on clients and business at hand.”
CEO, Insurance Agency
“With CFO as our partner, we’re able to see the total picture…. Through their expertise, we’re receiving the highest level of educated financial planning that will propel us into the future.”
President, Florida Architectural Firm