DSO and DPO are common, yet important concepts in accounting. Most companies know to measure these stats and regard them as key performance indicators. Through our work with our clients’ vendors we are beginning to understand the importance of another key metric, DCO. “Days Credits Outstanding” measures the amount of time that credits are open and available on your vendors AR records before you are able to verify the open amount and take it back to your bottom line. When we begin audits for our clients we see unchecked DCO at upwards of 1000 days. Through our efforts we are able to drive our clients’ DCO down to as close to day one as our clients’ audit scope will allow. Conceivably your DCO could be less than one month. The introduction of this indicator is significant because it adds a new measurable element of profit recovery. Not only is it important to recover the maximum amount of available credits, it is also important to recover these dollars in the fastest time frame possible thus maximizing cash flow.
“Days Credits Outstanding,” the New Killer Metric