KPI Library
Navigate your organization to excellence with 17,288 KPIs at your fingertips.




Why use the KPI Library?

Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

This vast range of KPIs across various industries and functions offers the flexibility to tailor Performance Management and Measurement to the unique aspects of your organization, ensuring more precise monitoring and management.

Each KPI in the KPI Library includes 12 attributes:

  • KPI definition
  • Potential business insights [?]
  • Measurement approach/process [?]
  • Standard formula [?]
  • Trend analysis [?]
  • Diagnostic questions [?]
  • Actionable tips [?]
  • Visualization suggestions [?]
  • Risk warnings [?]
  • Tools & technologies [?]
  • Integration points [?]
  • Change impact [?]
It is designed to enhance Strategic Decision Making and Performance Management for executives and business leaders. Our KPI Library serves as a resource for identifying, understanding, and maintaining relevant competitive performance metrics.

Need KPIs for a function not listed? Email us at support@flevy.com.


We have 50 KPIs on Accounts Receivable in our database. KPIs for Accounts Receivable are essential as they provide actionable insights into the efficiency and effectiveness of a company's credit and collection processes. By tracking metrics such as Days Sales Outstanding (DSO), Collection Effectiveness Index (CEI), and aging categories, organizations can assess the speed at which they are converting receivables into cash, identify potential cash flow issues, monitor customer payment performance, and strategize improvements.

These indicators help manage working capital more efficiently, reduce the risk of bad debt, and ultimately underpin the company's financial health and ability to reinvest in growth opportunities.

  Navigate your organization to excellence with 17,288 KPIs at your fingertips.
$189/year
KPI Definition Business Insights [?] Measurement Approach Standard Formula
Accounts Receivable Carry Cost

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The cost of carrying accounts receivable, including interest costs, opportunity costs, and administrative expenses. Helps in understanding the financial impact of carrying receivables and in recognizing ways to minimize these costs. Includes factors such as interest expenses, opportunity costs, and administrative costs related to maintaining accounts receivable. (Total Interest Expense + Opportunity Costs + Administrative Costs) / Average Accounts Receivable
Accounts Receivable Concentration Risk

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The risk associated with a high concentration of total receivables from a few customers, indicating dependency and potential credit risk. Highlights dependency on key customers and potential risk exposure if those customers fail to pay. Assesses the percentage of total accounts receivable from a small number of customers. Receivables from Top Customers / Total Receivables
Accounts Receivable Growth Rate

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The growth rate of accounts receivable over a period, which can signal changes in sales patterns or credit terms. Indicates trends in credit sales and potential changes in cash flow. Measures the percentage increase or decrease in total accounts receivable over a period. (Current Period Accounts Receivable - Previous Period Accounts Receivable) / Previous Period Accounts Receivable * 100
KPI Library
$189/year

Navigate your organization to excellence with 17,288 KPIs at your fingertips.


Subscribe to the KPI Library

CORE BENEFITS

  • 50 KPIs under Accounts Receivable
  • 17,288 total KPIs (and growing)
  • 360 total KPI groups
  • 107 industry-specific KPI groups
  • 12 attributes per KPI
  • Full access (no viewing limits or restrictions)

FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.

Accounts Receivable Staff Productivity

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The productivity of accounts receivable staff measured by the amount of receivable managed per employee. Reflects the efficiency of the accounts receivable team, useful for staffing and process improvement decisions. Considers the amount of accounts receivable processed per staff member. Total Amount of Accounts Receivable Processed / Number of AR Staff
Accounts Receivable to Sales Ratio

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A ratio that compares the accounts receivable amount to total sales, indicating the proportion of sales that have not yet been collected as cash. Provides insight into the proportion of sales not yet collected in cash, indicating potential liquidity issues. Compares total accounts receivable to total net credit sales. Total Accounts Receivable / Total Net Credit Sales
Aging of Accounts Receivable

More Details

The distribution of accounts receivable by the length of time they have been outstanding. A lower percentage of aging accounts is generally better, as it indicates that the AR department is effectively managing the collection process and minimizing the risk of default. Identifies collections issues and the risk of non-payment, helping prioritize collection efforts. Analyzes accounts receivable by age, typically categorized by 30-day increments. Sum of Receivables in Each Age Category (e.g., 0-30 days, 31-60 days, etc.)

Types of Accounts Receivable KPIs

We can categorize A/R KPIs into the following types:

Efficiency KPIs

Efficiency KPIs measure how effectively an organization manages its accounts receivable processes. These KPIs focus on the speed and effectiveness of collections, as well as the efficiency of the receivables management system.

Selecting efficiency KPIs helps identify bottlenecks and improve overall operational performance. Use these KPIs to streamline processes, reduce collection times, and optimize resource allocation. Efficient A/R management can significantly improve cash flow and reduce working capital needs. Examples include Days Sales Outstanding (DSO) and Accounts Receivable Turnover Ratio.

Effectiveness KPIs

Effectiveness KPIs assess the quality of the accounts receivable process by evaluating how well the organization achieves its collection goals. These KPIs focus on the success of collection efforts and customer payment behavior.

Choosing effectiveness KPIs allows you to gauge the impact of your collection strategies and customer credit policies. Regularly monitoring these KPIs can help identify trends, improve credit terms, and enhance customer relationships. Aim to balance aggressive collection practices with maintaining positive customer relations. Examples include Collection Effectiveness Index (CEI) and Average Days Delinquent (ADD).

Liquidity KPIs

Liquidity KPIs measure the ability of the organization to convert accounts receivable into cash. These KPIs provide insights into the short-term financial health and liquidity position of the organization.

Tracking liquidity KPIs is essential for maintaining adequate cash flow to meet operational needs. Use these KPIs to ensure that receivables are being collected in a timely manner and to identify potential liquidity risks. Maintaining a healthy liquidity position is crucial for operational stability and growth. Examples include Current Ratio and Quick Ratio.

Risk Management KPIs

Risk Management KPIs evaluate the potential risks associated with accounts receivable, such as default risk and credit risk. These KPIs help in identifying and mitigating financial risks related to receivables.

Incorporating risk management KPIs into your reporting framework helps in proactively managing credit risk and reducing the likelihood of bad debts. Regularly assessing these KPIs can inform credit policy adjustments and enhance risk mitigation strategies. Maintaining a low level of receivables risk is critical for financial stability. Examples include Bad Debt Ratio and Percentage of Overdue Accounts.

Growth KPIs

Growth KPIs measure the expansion of accounts receivable in relation to sales growth. These KPIs provide insights into the effectiveness of sales and credit policies and their impact on receivables growth.

Monitoring growth KPIs helps in aligning sales strategies with credit management practices. Use these KPIs to ensure that receivables growth is sustainable and supported by robust collection processes. Effective growth management can drive business expansion while maintaining healthy cash flow. Examples include Accounts Receivable Growth Rate and Sales to Receivables Ratio.

Acquiring and Analyzing Accounts Receivable KPI Data

Organizations typically rely on a mix of internal and external sources to gather data for Accounts Receivable KPIs. Internal sources include ERP systems, accounting software, and CRM platforms, which provide detailed transaction data, customer payment histories, and invoice statuses. External sources such as credit rating agencies and financial market data can offer additional insights into customer creditworthiness and economic conditions.

Analyzing this data involves several steps. First, data must be cleaned and validated to ensure accuracy. This often involves reconciling discrepancies between different data sources. Next, advanced analytics tools and techniques, such as predictive modeling and machine learning, can be employed to identify patterns and trends. According to a McKinsey report, organizations that leverage advanced analytics in their receivables processes can reduce DSO by up to 20%.

Visualization tools like dashboards and scorecards are crucial for presenting KPI data in an easily digestible format. These tools allow executives to monitor performance in real-time and make data-driven decisions. For example, a dashboard might display key metrics such as DSO, Accounts Receivable Turnover Ratio, and Bad Debt Ratio, along with trend lines and benchmarks. Regular reviews and updates to these dashboards ensure that they remain aligned with organizational goals and market conditions.

Finally, it's essential to establish a feedback loop where insights gained from KPI analysis are used to refine credit policies, collection strategies, and customer relationships. This iterative process helps organizations continually improve their accounts receivable performance. According to Deloitte, companies that adopt a proactive approach to receivables management can improve cash flow by up to 30%.

KPI Library
$189/year

Navigate your organization to excellence with 17,288 KPIs at your fingertips.


Subscribe to the KPI Library

CORE BENEFITS

  • 50 KPIs under Accounts Receivable
  • 17,288 total KPIs (and growing)
  • 360 total KPI groups
  • 107 industry-specific KPI groups
  • 12 attributes per KPI
  • Full access (no viewing limits or restrictions)

FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.

FAQs on Accounts Receivable KPIs

What are the most important KPIs for Accounts Receivable management?

The most important KPIs for Accounts Receivable management include Days Sales Outstanding (DSO), Accounts Receivable Turnover Ratio, Bad Debt Ratio, Collection Effectiveness Index (CEI), and Average Days Delinquent (ADD). These KPIs provide a comprehensive view of receivables performance and collection efficiency.

How can I reduce my Days Sales Outstanding (DSO)?

Reducing DSO can be achieved by improving invoicing processes, offering early payment discounts, and enhancing credit risk assessments. Regularly reviewing and adjusting credit policies based on customer payment behavior is also crucial.

What is a good Accounts Receivable Turnover Ratio?

A good Accounts Receivable Turnover Ratio varies by industry, but generally, a higher ratio indicates more efficient collection processes. Comparing your ratio to industry benchmarks can provide a better understanding of your performance.

How do I calculate the Bad Debt Ratio?

The Bad Debt Ratio is calculated by dividing the total bad debts by total sales and multiplying by 100 to get a percentage. This KPI helps assess the effectiveness of your credit risk management practices.

What is the Collection Effectiveness Index (CEI) and how is it useful?

The Collection Effectiveness Index (CEI) measures the efficiency of your collections process by comparing the amount collected to the amount due within a specific period. A higher CEI indicates more effective collections, helping you identify trends and areas for improvement.

Why is the Average Days Delinquent (ADD) important?

The Average Days Delinquent (ADD) is important because it measures the average number of days that receivables are past due. Lower ADD values indicate better credit control and customer payment behavior, helping you identify problematic accounts.

How can I improve my Percentage of Overdue Invoices?

Improving the Percentage of Overdue Invoices involves enhancing credit assessments, streamlining invoicing processes, and implementing effective follow-up procedures. Regularly reviewing and adjusting credit policies can also help.

What factors should I consider when measuring the Cost of Collections?

When measuring the Cost of Collections, consider both direct costs such as personnel and technology, and indirect costs like time spent on follow-ups. A comprehensive view of these costs helps identify areas for efficiency improvements.

KPI Library
$189/year

Navigate your organization to excellence with 17,288 KPIs at your fingertips.


Subscribe to the KPI Library

CORE BENEFITS

  • 50 KPIs under Accounts Receivable
  • 17,288 total KPIs (and growing)
  • 360 total KPI groups
  • 107 industry-specific KPI groups
  • 12 attributes per KPI
  • Full access (no viewing limits or restrictions)

FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.




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