Forecasting With Days Sales Outstanding

Use the Days Sales Outstanding form to forecast the expected closing Accounts Receivable balances for open Forecast periods. To calculate the projected closing Trade Receivables balances for validation, enter the expected percentage sales on credit for the open periods. Additionally, use the historical Actual Days Sales Outstanding (DSO) as reference to enter the expected number of days for sales outstanding.

After you save, the form values update based on the following calculations:

• Sales on Credit = Total Sales × % Sales on Credit

• Credit Sales per Day = Sales on credit ÷ Days in Month

• Trade Receivables Closing Balance = (Days Sales Outstanding) × (Credit Sales Per Day)

• Trade Receivables Monthly Movements = Previous Period Closing Balance – (Days Sales Outstanding × Credit Sales Per Day)

  Or

  Trade Receivables Monthly Movements = Previous Period Closing Balance – Forecast Period Closing Balance

Important:

If you have not already done so, ensure the Days in Month form is filled before you begin following the steps.

To calculate the expected Accounts Receivable closing balances for open periods:

1. From the Home page, go to Financials > Balance Sheet Trending.

2. Click Days Sales Outstanding.

3. In the Point of View, select a Version, Subsidiary, and Currency.

4. To apply the changes, click the Go icon .

5. In the % Sales on Credit row, click a relevant cell (data area) and enter the percentage of sales that are expected to be sold on credit. This is based on historical Actuals and your company’s billing practices. For example, enter 0.01 for a 1% increase or -0.01 for a 1% decrease.

6. In the Days Sales Outstanding row, click a cell (data area) and enter the number of days that sales are expected to be outstanding. This is based on your past collection history.

7. Click Save.

8. (Optional) To populate the Balance Sheet with the adjusted data, right-click the data grid and select Aggregate to Balance Sheet. The form populates with data in the input currency.

9. (Optional) To have your changes reflected in the relevant financial statements in the input and reporting currencies:

   1. Go to the Home page and click the Rules card.

   2. Beside the ruleset NFS_All Accts Forecast Data Refresh, click the Launch arrow.

Related Topics

Working With the Balance Sheet Trending Reports

Forecasting With Days Inventory Outstanding

Forecasting With Days Payable Outstanding

Submitting Final Adjustments to the Balance Sheet

Analyzing Trends in the Cash Cycle Dashboard

General Notices