Hi,
I would like to create a customer score using the following values
Gross Margin Percent = GM%
Gross Margin per Invoice Line Item = GPL
Days Sales Outstanding (90 day period) = DSO
Gross Margin Return on Investment for Consigned Inventory = GMROI
This is a wholesale business so Gross Margin for a sale is defined as 'Extended Sale Price - Extended Purchase Cost'. Gross Margin Percent is 'Gross Margin / Extended Sale Price'.
Days Sales Outstanding is defined on a 90 day period as '90 days/(90 days credit sales total/accounts receivable balance)'. This is a measure of how quickly credit sales are turned into cash in the bank.
The time period is 3 months. And limited to 'top customers'.
Regarding cost of sales and support, I can't address these until my company implements activity-based costing.
One simple idea for a score is to use
Score = (GMROI * GM% * GPL) / DSO
Any suggestions or refinements/changes?
Regards, Dan