EDI Invoice Speed and DSO Cash Release Calculator
Every day an invoice waits after shipment is a day of cash tied up. When the 810 invoice leaves automatically at ship confirmation, the saving shows up as lower DSO. This calculator sizes it.
Your numbers
Share of sales affected by the invoice delay.
Include batching, approvals and re-keying delays.
Automated 810 sent at ship confirmation is close to zero.
Borrowing cost or the return on cash you would otherwise earn.
Your results
Assumes the customer pays a fixed number of days after invoice date or receipt. Customers that pay on a calendar cycle may see less benefit.
Cash released by new invoice delay
Sweeps New days from ship to invoice sent from 0 to 4, holding your other inputs fixed.
Measure your ship-to-invoice delay
We can outline the ERP query that shows invoice timing per customer. Optional.
Optional. The tool and every export work without this. No spam.
How to use it
Measure the average gap between shipment date and the date the invoice reaches the customer, using ship confirmation and invoice transmission timestamps. Enter the revenue that goes through that process and the new expected delay once the 810 is triggered by the shipment. The result shows cash released, DSO reduction and the yearly value at your cost of capital.
- Use transmission time, not invoice creation date
- Include approval holds and weekly batching
- Apply only to customers whose terms start at invoice date
Formula
Days saved equal the old delay minus the new delay. Cash released equals affected revenue divided by 365 times days saved. DSO reduction equals days saved times the affected share of revenue. The annual benefit multiplies cash released by the cost of capital. The cash is a one-time release, while the financing benefit repeats every year.
Reading the result
On revenue of 24 million with 60 percent affected, saving three and a half days frees roughly 138 thousand dollars, which is modest compared with project cost unless volume is high. The bigger gains come from fewer disputes, since a clean 810 that matches the order and ASN gets approved and paid sooner.
Common mistakes
Do not apply the saving to customers who pay on a fixed weekly run regardless of invoice date, and do not double count with discount programs. Also confirm that terms start at invoice date and not at receipt of goods, since the latter cancels the benefit of early invoicing.
Frequently Asked Questions
Does faster invoicing always reduce DSO?
Only when payment terms start from the invoice date and the customer pays on terms. If terms start at goods receipt, or the customer pays on a fixed cycle, the effect is smaller. Check each major customer's rules.
What is the right cost of capital to use?
Use your revolver interest rate if you borrow, or the return you could earn on spare cash. Many finance teams use a blended rate between four and ten percent, but use your own treasury figure.
Why does invoice accuracy matter as much as speed?
An invoice that mismatches the purchase order or ASN is held for dispute, which can add weeks. Accurate EDI 810 data often saves more days than sending it a day earlier.
Is the cash release a recurring saving?
No. Cash released is one-time working capital. The recurring benefit is the annual financing cost you avoid on that cash, shown separately in the results.
If you want invoice timing and match status reported by customer from your ERP, we can build that privately for your finance team.
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