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Average Terms: Knowing How Long it Takes Your Customers to Pay Is Not Enough
By Michael Van Luven
Vice President and Senior Project Director
While metrics such as EDSO, or even DSO, are useful gauges of receivables performance trends, they only present one aspect of a complex environment. Knowing how long, on average, customers are taking to settle their invoices is quite useful. However, this statistic is most relevant when it is compared with the average amount of time that they have been granted to pay. Clearly, for a comparison of credit period taken to credit period granted to be relevant identical data sources or samples must be compared.
