DSO (Days Sales Outstanding) is what i go by to tell when my company (projects) to collect the Sales they did today( meaning my company rented/sold $100,000 today - but did not collect that money. The DSO (i already have) gives the company a good average of how fast it collects that $100,000) The DSO - is already done. I did that and it works great.
Again - example. DSO = 74 days. This means, if the company takes $100,000 in sales today (credit), in 74 days it should collect that money…
Payables - is done with the invoices the customers give us (customers we buy stuff from - this is NOT same customers that rent equipment from us). On the invoice - we have a date it is due - For example:
Cust A - we owe them $100,000 due in 74 days.
So if i took both examples:
DSO (74 days) and the sales is $100,000
Payables due in 74 days and total is $100,000
Then in 74 days:
$100,000 (SALES based on DSO) - $100,000 (Payables based on customer) = $0
Eventually we want:
(Example) Projected Income:
Jan - $100,000
Feb - $150,000
March - $200,000
My problem (i think ) mostly lies in doing all of this by month. Because i am getting projected sales (DSO determines the month in the future) and align this month with the payables due month.