In this issue:


HR Management

Salary Index 2009

Family Friendly
Employment Practices

Making an Employee Redundant

Payroll Outsourcing

Personnel Leasing

Statutory Holidays in 2009:

- China
- Hong Kong
- Japan
- Malaysia
- Singapore
- Taiwan

Corporate Training

The Focus

Public Seminar

Case Analyzes

Credit Management

AR Assessment Tool

Cost of Bad Debt

What Should We Do

Contact US

Account Receivable Assessment Tool – “DSO”
Written by Andy Li CM MCCMA

“DSO” stands for “Days Sales Outstanding” and it is a company’s average collection period. Typically, DSO is calculated monthly. A lower number of days indicated that the company collects it outstanding receivables quickly.

The equation is:


ABC Limited presented their AR Aging Report as at September 30, 2xx8. What is their “DSO”?

Age Bucket

Dollars in Bucket

Credit Sales in Period




1-30 days past due



31-60 days past due



Total AR





It shows us the relationship between outstanding receivables and sales achieved over a given period. We can compare the result with local industrial benchmark to evaluate the company’s performance. It is an important tool in measuring liquidity. Higher DSO can be an indication of poor follow up on delinquencies. An increase in DSO can result in cash flow problems, and may result in a decision to increase the creditor company’s bad debt reserve.