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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Measure Category:
Cycle Time
Measure Id:
100178
Total Sample Size:
8,346 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are days.

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Days sales outstanding in accounts receivable

Key Terms

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Days Sales Outstanding

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

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 (7.3.0)

  • 9.2.3.1 - Establish AR policies (10799)
  • 9.2.3.2 - Receive/Deposit customer payments (10800)
  • 9.2.3.3 - Apply cash remittances (10801)
  • 9.2.3.4 - Prepare AR reports (10802)
  • 9.2.3.5 - Post AR activity to the general ledger (10803)