Covering Business Credit

Credit Questions and Answers
Business Credit and Collections
Commercial Credit Management

Return to Q and A 2004Home

Doctor Credit

Last week, a question was asked about how to cut DSO in half. You never said or even suggested that this was virtually impossible. Would you agree that it is highly unlikely that any credit department can cut DSO in half?

Answer: Your point is well taken, and we would agree that it is unlikely that management would be willing to allow the credit and collection department to take the necessary steps to cut DSO in half. Is it possible to do so? Sure. However, in order to do so, a company would probably have to shorten or eliminate open account terms, and reduce or withdraw open account terms to all but the most creditworthy customers. Consequently, customers would be likely to go elsewhere unless the creditor company in question had a product with no competitors and no viable substitutes.

spacer spacer