Ross Crawford posted an update 6 months, 3 weeks ago
Wise eastern proverb says: ‘The finger pointing to the moon is not the moon’.
Debtors divided by sales and multiplied by days in period have nothing to do with how cusotmers actually pay. Though it is crystal clear form the math, vast majority of people continue to believe that reduction of DSO is a tangible benefit for a business.
Real credit management delivers real benefits. They are sales support, overdue and bad debts reduction. And all of them are hardly linked to specific sections of Balance Sheet and P&L.
We, people dedicated to credit, have choice – concentrate on real and help business, or generate and explain virtual measures.
Judging on the last PWC working capital report, where DSO increase of 7 days called “inability to collect”, the virtual side is winning.
Which side is yours?
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