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Many companies use ADD (AverageDaysDelinquent) or look at the ratio of open invoices to overdue invoices. Consistency in credit processes reduces baddebt and fosters healthier customer relationships. Reassess what data you are using to measure success.
Although different A/R solutions deliver different metrics, cash balance and days sale outstanding only scratch the surface of measuring performance. Consider tracking A/R performance metrics that include best possible DSO , averagedaysdelinquent (ADD), collective effectiveness Index (CEI), and accounts receivable turnover ratio (ART).
Success Indicators: Reduced BadDebt: Lower instances of non-payment or defaults. AverageDaysDelinquent (ADD): Indicates the average number of days payments are overdue. Consistent Credit Decisions: Uniform application of credit terms across the customer base.
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