What are DSO and Aged buckets?

Question

Accepted Answer

DSO stands for Days Sales Outstanding, a measure of how long it takes for a company to collect payment from its customers. Aged buckets are categories used to track overdue payments based on how long they have been outstanding.

DSO is calculated by dividing accounts receivable by total credit sales and multiplying by the number of days in the period.
Aged buckets typically include categories like 0-30 days, 31-60 days, 61-90 days, and over 90 days.
Monitoring DSO and aged buckets helps companies identify potential cash flow issues and take appropriate actions to improve collections.
For example, if a company has a DSO of 45 days and a significant amount of overdue payments in the 61-90 days bucket, it may indicate a need for more aggressive collection efforts.

Accepted Answer

Days Sales Outstanding (DSO), Average Days Delinquent (ADD) and Days Beyond Terms (DBT) are good metrics for tracking overdue payments and invoices.

What are DSO and Aged buckets?

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