Collections Performance Management - by Ravi Patel

 

 

For Entrepreneurs, collection of accounts receivable balances on a timely basis is an important contributor to cash flow. The faster the collections, the better the cash flow.

 

How do you measure your collection process? How do you know that it is working well and your company is continuously improving its collection efforts?

 

One potential metric is Days Sales Outstanding (DSO). If you calculate your monthly DSO and monitor the trend, you will see the efficacy of your collections efforts.

 

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