Risk And Opportunity With Otc Software
DAYS SALES OUTSTANDING EQUATION
For businesses seeking to optimize their revenue cycles, the choice to implement an order-to-cash software suite carries with it both potential rewards and risks. Chief among the risks is an incomplete assimilation of the software by users, resulting in underutilization of the program’s features. prime example of this is the Days Sales Outstanding (DSO) calculation: an effective tool to demonstrate the firm?s ability to quickly convert receivables into cash. If business lacks software-based solution for DSO, the risk of costly inefficiencies goes up considerably.
The primary benefit of DSO calculation via software lies in its expedience. Historically, the assessment of DSO was the laborious practice of manually entering data from sales-orders, bills, and other documents into spreadsheet, then crunching the numbers to identify any discrepancies. With order-to-cash software, the entire process is automated and data is entered electronically. This reduces the chance of errors and also eliminates tedious duplication of effort.
Furthermore, the right software package can offer an organization highly in-depth analyses and ?level 2? functionalities. These functionalities enable the firm to calibrate its metrics to specifics projects, customers and regions. Understanding firm’s precise rate of customer payments not only bolsters the confidence within the accounts receivable department but also serves as the basis for careful management of cash flow. Such granular information can have far-reaching impacts on organizational flow and workflow, especially when combined with other metrics across different areas of the business, such as sales, international accounts, and customer service.
The implementation of proper order-to-cash software can consequently deliver lucrative insights and improved operations for CFOs, finance executives, and staff alike. Revenue cycles are observable and controllable in real time, meaning organizations can become more fleet-footed in tracking and managing their accounts receivable. The days of manual data entry and assessments of DSO are quickly being replaced by software programs that incorporate timely analytics into their service offerings.
For companies looking to make clear upgrade from their traditional OTC set-up, the risk of not using software for DSO calculations can quickly turn into reward for the entire organization through better-informed decision-making and more optimized work environments. It is the responsibility of CFOs and other finance stakeholders to make the leap for better tomorrow.
