Direct Calculation Method

The direct calculation of DSO is based on original documents. The period of time between posting an invoice (posting date) and receiving payment for the invoice (clearing date) is calculated for the relevant document line item to provide accurate results.

The formulas for the direct calculation method are as follows:

Indirect Calculation Method

With the indirect calculation method DSO is calculated on an aggregated level. Here the accounts receivable balance and revenues are taken into account to derive the measure on the DSO performance.

DSO can be calculated per month or for the entire selected timeframe. The calculation per month is used for those analysis steps that depict a development over time.

The formulas for indirect calculation per month are as follows:

The formulas for indirect calculation overall (for the entire selected timeframe) are as follows: