Days sales outstanding
This measure calculates the average number of days sales outstanding in accounts receivable for a business entity. Days sales outstanding is the length of time from when a sale is made until cash for it is received from customers. The amount of sales outstanding expressed in days is calculated as [Average of gross accounts receivable (AR)] / ([Total gross annual sales] / 365). Exclude all unbilled receivables when calculating this measure. It is part of a set of Cycle Time measures that help companies analyze the duration of the process "process accounts receivable (AR)" process.
Benchmark Data
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Compute this Measure
Units for this measure are days.
Days sales outstanding in accounts receivable
Key Terms
Days sales outstanding is the length of time from when a sale is made until cash for it is received from customers.
The amount of sales outstanding expressed in days is calculated as
[Average of gross accounts receivable (AR)] / ([Total gross annual sales] / 365)
Cycle time is the total time from the beginning of the process to the end. This includes both time spent actually performing the process and time spent waiting to move forward.
The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.