Help required for getting the Actual Formula's for Collection Metrics
HI All,
Could you please help me understand the different variables meaning in the given formula for ACM metrics.
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Conventional Days Sales Outstanding (DSO) *
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Multiply the customers current A/R Balance by 30 and divide by prior period sales.
True DSO
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Formula: True DSO per invoice = Number of days from invoice date to reporting date * (invoice amount / net credit sales for the month in which sale occurred)
The sum of True DSO for all open invoices = True DSO per total accounts receivable.
Collection Effectiveness Index (CEI)
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Formula: [Beginning Receivables + (Credit Sales / N) - Ending Total Receivables] / [Beginning Receivables + (Credit Sales / N) - Ending Current Receivables] x 100.