I have been hearing something a little different during the recent set of Earning calls delivered by CEOs to Wall Street analysts. Right upfront, many executives are warning their shareholders that a little know rule change to the tax code is going to have a potentially huge impact on businesses and business decision-making in 2022 and beyond.
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In my last blog on 3 Ways of Improving Days Sales Outstanding, I shared thoughts and insight on one of the newer metrics of financial management that many organizations are focusing on. I was fascinated by the response and had several great conversations about it and how the information was helpful in terms of immediate application to the decision-making required to improve the DSO.
One of the conversations I had with a former business acumen workshop participant who is a Supply Chain leader led to an interesting dialogue on another related topic called the Cash Conversion Cycle (CCC) and this blog will share some interesting content on that emerging concept as well.
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I can say with some certainty that most of the readers of this blog didn’t wake up this morning hoping that I would write about ways of improving Days Sales Outstanding (DSO).
If you have no idea what I am talking about, you are not alone. Days Sales Outstanding is one of those financial terms that in years past were kept in the background by finance departments but today has become a key metric that matters.
What is Days Sales Outstanding?
Days Sales Outstanding (DSO) is a measure of the average number of days that it takes a business to collect payment for a sale. Typically, a business offers its customer credit terms (how long it takes for them to pay you) which extends the time it takes to collect the cash. DSO is often determined on a monthly, quarterly, or annual basis.
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If you are a regular reader of this blog, you know that most of the ideas and things shared come from real-world dialogues and experiences either from an Advantexe training program or interviews and research I am conducting as part of the development of new programs.
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If you have been through an Advantexe Business Acumen program, or are currently engaged in any Business Acumen learning activities with us, you know that the Q4 End of Year Earnings call is the most important call of the year.
This is the call that provides the actual final data of what just happened during the year and also provides a first look and guidance into the upcoming year. As you listen to your own company earning calls or our own versions of your “Decoding the Earnings Call,” here are 8 key business acumen concepts that you should be listening for:
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