Industry Standard Ratios

  • Updated

Industry Standard Ratios are estimates using readily available numbers from statements, a weighting is then applied to uncollected invoices. 

The Average Days to Paid are exact figures based on paid invoices and does not factor in the unpaid invoices. Days Sales Outstanding (DSO) and (Days Beyond Terms) DBT can vary from month to month, and over the course of a year with a company's seasonal business cycle.

 

Days Sales Outstanding (DSO)


Used to estimate the average collection period from when an invoice is issued. Different time periods can be used.

DSO = (Accounts Receivable / 30 days sales) x 30

 

Days Beyond Terms (DBT)


A weighted average calculation of receivables to estimate the average time beyond when an invoice is due and when it will be paid.

DBT = ((Td1 x 15) + (Td2 x 45) + (Td3 x 75) + (Td4 x 105)) / Accounts Receivable

Where:

  • Td1 = Total dollars in aged 1-30 days
  • Td2 = Total dollars in aged 31 -60 days
  • Td3 = Total dollars in aged 61-90 days
  • Td4 = Total dollars in aged 91+ days

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