Forecasting With Days Sales Outstanding

Use the Days Sales Outstanding form to forecast the closing Accounts Receivable balances for open Forecast periods. To calculate the projected closing Trade Receivables balances, enter the expected percentage of sales on credit for the open periods. Also, use the historical Actual Days Sales Outstanding (DSO) as a 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 haven't already done so, make sure the Days in Month form is filled out before you start 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, choose a Version, Subsidiary, and Currency.

4. In the % Sales on Credit row, click a cell and enter the percentage of sales that you expect to be sold on credit. This value 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.

5. In the Days Sales Outstanding row, click a cell and enter the number of days that you expect sales to be outstanding. This value is based on your past collection history.

6. Click Save.

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

8. (Optional) To update the relevant financial statements in both 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