Paidnice gives you comprehensive and real time insight into your AR Metrics via the dashboard.
Here’s a breakdown of the key metrics available on the dashboard, and how they can help you get more insight into your collections process.
Outstanding
Total value of invoices that have been issued but not yet paid.
This is your current receivable balance, which gives you a snapshot of how much revenue is tied up in unpaid invoices. Monitoring this metric helps you stay aware of the liquidity gap and plan your cash flow accordingly.
Days Sales Outstanding (DSO)
The average number of days it takes for your business to collect payment after an invoice is issued.
A lower DSO typically indicates efficient collections and strong payment discipline among customers.
High DSO, however, suggests that your receivables are being paid late, impacting your liquidity. You can use Paidnice’s automated actions, like personalized email reminders and payment incentives, can help reduce your DSO.
How Days Sales Outstanding is calculated
Total Accounts Receivable: Add up the value of all unpaid invoices (both current and overdue).
Total Credit Sales: Calculate the total value of sales made on credit (excluding cash sales) for the same period.
Number of Days: Use the time period you’re measuring (e.g., 30 days for monthly DSO).
Apply the Formula: Plug the numbers into the formula to get your DSO.
Example:
Total Accounts Receivable: £21,723.03
Total Credit Sales (last 30 days): £12,581.60
Number of Days: 30
This means it takes approximately 51.8 days to collect payment on average.
30 Day Sales
The total sales generated from invoices in the last 30 days.
This metric provides a short-term view of your sales performance. Comparing it against overdue and outstanding amounts helps you understand how effectively your receivables align with recent sales trends.
Overdue
The total amount of invoices that remain unpaid beyond their due date.
Overdue invoices are a key indicator of potential cash flow problems. By keeping track of this figure, you can identify the need for stronger collections processes, such as automated late fee reminders or escalations.
Days Sales Overdue
Days Sales Overdue focuses specifically on the overdue portion of your receivables, showing the average number of days invoices remain unpaid past their due date.
How Days Sales Overdue is calculated
Total Overdue Amount: Add up the value of all overdue invoices (past their due date).
Total Credit Sales: Use the same sales figure as in the DSO calculation.
Number of Days: Use the same time frame as DSO (e.g., 30 days).
Apply the Formula: Plug the values into the formula.
Example:
Total Overdue Amount: £16,323.03
Total Credit Sales (last 30 days): £12,581.60
Number of Days: 30
This means overdue invoices remain unpaid for an average of 38.9 days.
Key Differences between Days Sales Outstanding, and Days Sales Overdue
Days Sales Outstanding (DSO): Measures the average collection time for all invoices (current + overdue).
Days Sales Overdue (DSO Overdue): Measures the average overdue period, focusing only on unpaid invoices past their due date.
Avg Overdue Age
The average age (in days) of all overdue invoices.
This metric tells you how long customers have been delaying payments. A higher average overdue age signals that stronger measures, such as introducing late fees or payment plans, may be necessary to encourage timely payments.
If you need a help with anything, reach out to our team via email on [email protected]