How does calculating Best Possible DSO help me to measure the effectiveness
of my department's collection efforts?
Answer: By itself it does
not accomplish this function. However, the formula for calculating Days
Delinquent Sales Outstanding [DDSO] is: DSO - Best Possible DSO = DDSO.
Therefore, by calculating the Best Possible DSO you are able to arrive
at your department's DDSO...and it is widely believed that while there
are any number of factors that prevent the credit department from controlling
DSO there are far fewer limitations on the credit department's ability
to manage DDSO and therefore that DDSO is a useful tool in measuring
the effectiveness of your department's collection efforts. |