Days Deduction Outstanding (DDO) is a metric used by businesses to assess the efficiency and speed at which deductions are resolved. This metric provides insights into the efficiency and effectiveness of a company's deduction management process.
How to Calculate Days Deduction Outstanding?
1. By Dollar Amount:
Calculating DDO by dollar amount helps you understand the total value of outstanding deductions. It’s particularly useful for financial planning, assessing cash flow, and future budgets.
2. By Deduction Count:
Calculating DDO by the deduction count gives you a more accurate picture of how many individual deductions are outstanding. It’s useful for highlighting areas where process improvements are needed to reduce resolution times.
Regardless of the method used, Lower DDO is always preferable as it indicates quicker resolution of deductions. However, the context and specific business circumstances also play a role in determining what constitutes a "good" DDO.
