Days sales outstanding

This measure calculates the average number of days sales outstanding in accounts receivable for a business entity. Average days sales outstanding is calculated as 360 days divided by the ratio of net sales divided by the average month-end trade accounts receivable balance. 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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Measure Category:
Cycle Time
Measure Id:
100178
Total Sample Size:
6,737 All Companies
Performers:
25th
Median
75th

Compute this Measure

Units for this measure are days. Lower values are better.

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Days sales outstanding in accounts receivable

Key Terms

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Cycle Time

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.

Median

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.

Measure Scope

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Cross Industry (7.2.1)

  • 9.2.3.1 - Establish AR policies (10799) - Creating rules and regulations to be followed in case of credit sales to customers. Create rules and procedures to follow at the time of sale (e.g., the allowable number of installments).
  • 9.2.3.2 - Receive/Deposit customer payments (10800) - Collecting cash from customers. Deposit it into bank account. Make entries into the books of accounts.
  • 9.2.3.3 - Apply cash remittances (10801) - Checking and moving funds between countries for business activities, typically through authorized remittance agents.
  • 9.2.3.4 - Prepare AR reports (10802) - Preparing reports that detail balances due or what to collect from customers at a certain point in time.
  • 9.2.3.5 - Post AR activity to the general ledger (10803) - Preparing the general ledger for account receivables from journals. Place all journal entries related to accounts receivables in the general ledger accounts of a business.