Credit risk manager3/19/2023 You can get these figures by running a company aging report, which distinguishes your receivables into buckets (Current, 1-30 days, 31-60, 61-90, 90+). This includes current AR, plus invoices due and past due. Total AR includes the total of receivables due to the company. If your typical invoice terms are Net 30, your current AR is the sum of all invoices that are younger than 30 days. Depending on the company’s goals and size, this percentage goal is what you strive to meet each month.Ī current receivable (or current AR) is a receivable that is not due yet. The other five help credit professionals see the overall picture and make better credit decisions:Ĭurrent percentage calculates the percentage of receivables that are current. The first seven measure success in credit and collections: You can generally get the figures used to calculate these KPIs from financial statements, accounts receivable records, and sales data. The formulas are also included below in case you need to calculate them manually. You can generate most of these automatically from common construction accounting software platforms, like Quickbooks or FoundationSoft. These aging buckets are standard, but you will see some variations from company to company.īelow are 12 of the most common KPIs used in construction credit operations. This report distinguishes your receivables into buckets (Current, 1-30 days, 31-60, 61-90, 90+). These figures are obtained from running your company’s aging report. This report contains the total invoices booked per day or month depending on the day you run it. So, Total AR = invoices not due + past dues Total AR = the total of receivables that is due to the company which includes invoices due, not due, and past due.Current receivable = a receivable that is not due yet. ![]() How can you lead a team or lead yourself if you are not checking to see if your efforts are working? Have you developed KPIs for your team? Are you reviewing them monthly, quarterly, and/or annually? Metrics are important to keep your team on track to be a highly successful force. 12 metrics to measure credit & collections So read on (and then put them into practice)! Let the fun and magic begin. I don’t to bore you with all the different types of KPIs (there is a virtually endless number of them), so this article will dig into some common KPIs that a credit professional should track to make sure you are making the necessary adjustments, decisions, and risks to fulfill your company’s needs. But your failures aren’t anything to be afraid of - in fact, a downward trend in your success metrics can be a powerful learning tool. Of course, reviewing performance is fun when a team or individual is successful it doesn’t feel as rewarding when numbers are declining. My credit team takes pride in reviewing monthly KPIs. KPIs support healthy competition, both between team members and against your own past performance. Think of it like sports stats: You can compare two baseball players by looking at their runs batted in (RBI) or number of errors - these are both KPIs. ![]() Just about anything you can measure can be a KPI. Accounts Receivable Turnover rate (ART)Ī key performance indicator (KPI) is a performance measurement used to evaluate success, whether for an individual, a team, or a company. ![]() 12 metrics to measure credit & collections.
0 Comments
Leave a Reply.AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |