The accounts receivable process is critical for keeping cash flow steady and ensuring healthy business growth. Because receivables directly affect working capital, measuring the right KPIs helps businesses spot risks early and improve financial performance. Without clear visibility, delays or errors in collections can quietly undermine profitability.
Why KPIs Matter in the Accounts Receivable Process
The accounts receivable process involves more than sending invoices and waiting for payment. It includes tracking customer behaviour, ensuring accuracy in billing, and managing disputes. Because each step can introduce delays, KPIs act as early warning signals. They show whether collections are efficient or if improvements are needed.
Essential KPIs to Measure in Your Business
Here are some important KPIs every business should track within the accounts receivable process:
- Days Sales Outstanding (DSO) – Measures how long, on average, it takes to collect payment after a sale.
- Collection Effectiveness Index (CEI) – Shows how successful collections efforts are compared to total receivables due.
- Invoice Accuracy Rate – Tracks how many invoices are issued without errors that cause delays or disputes.
- Bad Debt Ratio – Highlights the percentage of receivables that are unlikely to be collected.
- Average Days Delinquent (ADD) – Measures the number of days invoices remain overdue, providing insight into collection efficiency.
These KPIs not only reveal the current state of receivables but also highlight areas that need automation or tighter controls.
How to Improve KPIs in the Accounts Receivable Process
The accounts receivable process can be strengthened through automation and streamlined workflows. For example, automating invoice distribution reduces the risk of late or lost invoices, while integrating with customer systems improves visibility. Because each KPI reflects customer payment behaviour, tools that improve accuracy and transparency directly improve results.
Key improvements include:
- Automating invoice delivery to ensure customers receive documents on time.
- Standardising processes to minimise errors and disputes.
- Using dashboards to track KPIs in real time for quicker decision-making.
- Building stronger communication channels to resolve issues before payments are delayed.
Building Long-Term Value
When the accounts receivable process is monitored with the right KPIs, businesses gain better control over cash flow and reduce risk. Because cash flow is the lifeline of growth, stronger receivables management not only supports short-term goals but also creates resilience for the future.
Want to strengthen your AR process? Learn more about our Accounts Receivable solution and how they can help you improve collections, reduce errors, and accelerate cash flow.