| At a glance The damage caused by the tangled web of DSO goes beyond financial performance. It snares everyone. It results in a lot of unproductive and frustrating work. What’s more, your real DSOs are more than you think. Fortunately, there is a ready solution. |
DSOs or days sales outstanding is a common financial indicator. As an IT professional, you may hear it only in passing. You are not alone if you think that only the finance and salespeople need to deal with it. Whether you notice it or not, your company’s DSOs affect you.
The DSO is a simple concept: it is calculated as an average number of days it takes to receive payments against invoices raised in a given period, say a month, a quarter, or a year.
DSOs affect everyone
DSOs become a tangled web because the invoicing processes are manual, complex, and error-prone. Whether you are a developer, a project manager, a salesperson, or you are in a resource management group, the web has ensnared you.
DSOs are caused by mismatch with billing schedules in the contracts. They occur because of disputes raised by customers over specifications of deliverables, quality, or delays.
Changes made by the customers can also be contributing factors. DSO can also increase due to delays in raising invoices missing customers’ payment cycles.
If you take into account the delays in billing due to the manual processes, your company real DSOs are much higher than what they seem to be.
Depending on your role, you can add to the ‘tangles’. But the tangled web affects you too. It keeps you busy in the last 10 days of every month when there are frantic efforts to raise invoices.
After the month is over it will keep you busy following up with customers or resolving discrepancies and disputes. Internal reviews can keep many of you busy because the information is so scattered. This period can also extend to the first 10 days of the month.
None of the above work is productive. The tangled web slows everyone down.
Finger-pointing
The tangled web causes finger-pointing. The account department flags the ‘DSOs’ and the sales people are called in to expedite collections. They blame billing errors or unresolved customer complaints.
The project managers might point to some contractual issues or not having the right resources. The blame game bruises everyone. It keeps people busy in finding out how mistakes were made ‘somewhere else’. It triggers conflicts and turf wars. Very little can be done to prevent such problems unless the root causes are eliminated.
Project management culture can’t thrive in such an atmosphere.
The delivery-to-cash processes are complex and manual because the information needed is not available in a few keystrokes. It lies scattered in different departments and their spreadsheets or software applications.
No one likes unproductive work and such conflicts To address their root causes, you need to take a look at professional services automation (PSA) software.
Out-of-box
Kytes PSA software is an out-of-the-box solution that integrates all your existing software. It builds data pipes across them. It prevents multiple versions of data.
The PSA establishes automated and error-free billing processes that takes into account all factors like the billing schedules, completion of agreed deliverables, and resources used.
The Kytes PSA software untangles the DSO web and keeps it untangled. It does much more. To find out more and to get a demo, reach us at [email protected]
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