for this is unpaid invoices; these are payments that have been due but unpaid by customers and are typically measured every month or over any set period rather than single transactions such that you can see how bad your collection department is doing. There are also accounts receivable metrics that show how many overdue bills there are and collection KPI examples to help give you some ideas about what might work best for your company.
The key is to have the right KPIs in place to see what's happening with your company and make changes accordingly. You need specific metrics to give a clear picture of where efforts should be focused but not too narrow such that they don't allow for any interpretation or different strategies. With the right KPIs in place, you'll know everything there is to know about how well things are going at each stage of your business!
It's important to have credit control measures put into place so businesses can protect their cash flow from being misallocated - one big KPI for this is unpaid invoices which measure payments due but unpaid by customers typically measured every month rather than single transactions.
1. Average Age of Debt or Days Sales Outstanding (DSO)
The average age of debt or day sales outstanding (DSO) is the length of time it takes for a company to collect its invoices. DSO is calculated by dividing total accounts receivable (money owed) by gross sales.
2. Effectiveness Collection Index (ECI)
The Collection Effective Index is essential for knowing how well a company can collect its receivables. One of the things this KPI measures are your success rates in collecting customer accounts from those that have not paid you yet.
This metric measures both on-time and delinquent accounts - it also looks at what percentage of overdue invoices (i.e., ones that have been unpaid over 30 days) are collected in full versus partially collected.
3. Promise to Pay (PTP)
The Promise to Pay (PTP) KPI is an important way of measuring the efficiency and effectiveness of your debt collection efforts. This metric calculates how many unpaid invoices you have in a set period divided by the total accounts receivable just before that same interval, which will give you some insight into how effective your team has been at getting money owed back from clients.
4. Profit Per Account (PPA)
The ProfitProfit Per account (PPA) KPI shows how much ProfitProfit is generated on average for each customer. A PPA of $300 means that the company makes an average profit of $300 on every account it collects - even if only a portion of the balance is collected.
5. Account Receivable Turnover (ART)
The Accounts Receivable Turnover Ratio (ART) is the best way to measure how quickly you are collecting on your outstanding accounts. This KPI is calculated by dividing the total amount of accounts receivable at a set period by your gross revenue in that same interval, and it can be interpreted as follows: if this ratio exceeds 1 then you're doing better than average; below 0.8 means trouble ahead due to slow collections rates - so get ready for more debtors clearing their balances!
Conclusion: If you’re not happy with how your collection department is doing, it might be time to switch over to automation. Automating collections can help save on staff costs and reduce the number of unpaid accounts receivable that are still outstanding. We have a number of
for credit control measures in place that will help you monitor what's going wrong or right in this part of your business so you'll know if a change needs to happen sooner rather than later. Don't let cash flow be misallocated by running an inefficient A/R process; find out more about our