The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 1 3/31/2016

- Why have metrics related to O2C

- What can impact O2C metrics

- What questions should you consider before starting?

- KPIs to consider

Agenda

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 2 3/31/2016

Why have metrics related to O2C?

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 3 3/31/2016

- Who is going to track the KPIs? - Will you be partnering with other teams and

combining KPIs? - What audience is going to receive the KPIs? - Why are you tracking the KPIs?

- Are you trying to make a business case? - Track process bottleneck and successful resolution? - Track team success

- Why does the KPI matter? - What story does it tell and to who?

Questions to consider before

starting

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 4 3/31/2016

Different Types of Metrics

• Production

• Profitability

• Business Specific

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 5 3/31/2016

What can impact O2C metrics?

Things to consider

• Multiple systems

• Multiple locations

• Multiple departments &

jobs/roles

• Multiple stakeholders

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 6 3/31/2016

Metric: DSO (Days

Sales Outstanding) • Trend is more important than an

individual value

– Tracking direction of DSO

(increasing vs. decreasing)

• Important to benchmark against

other companies in same

industry

A measure of the average number

of days that a company takes to

collect revenue after a sale

Can indicate the amount of sales in

a period

Can indicate how quickly customers

are paying

Can indicate how effective credit &

collections efforts are

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 7 3/31/2016

Metric: Trade AR & Net

Sales

• Trade receivables are amounts

billed to its customers when it

delivers goods or services to

them

– Should be classified as current

assets if expecting payment within

1 year

• Net Sales reflects the amount of

sales generated after the

deduction of returns, allowances

and discounts

Open Receivables attributed to 3rd

party sales

Net Sales to 3rd party customers

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 8 3/31/2016

Metric: % Current • Important to measure % current

along with $ past due

– For example, a larger customer

could be 95% current but have

$500,000 past due

– Tracking $ past due alongside further

assists meeting overall % current

goal by collecting larger amount of

cash due

Trade receivables that are not

considered past due per payment

terms

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 9 3/31/2016

Metric: Customer

Orders

• Metrics should give insight to customer

service and efficiency of placing

accurate orders

• # of New Orders

• # of Open Orders

• # of Orders with Errors

• On Time Delivery %

– Highlight issues for customers that

won’t start payment process until

product is received

Various metrics that cover the

efficiency of the order process

High volume of billing errors will

have negative impact on DSO due

to customers receiving inaccurate

delivery and/or invoice

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 10 3/31/2016

Metric: Total Cash

Received • Metric should include total $ and

total # of payments received

• If possible, auto application of

cash should be considered as a

metric

• Provides insight to cash

application needs and process

Measure cash received for 3rd party

receivables

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 11 3/31/2016

Metric: Discrepancies

• Discrepancies impact % current

• Discrepancies can point to

break down in process such as

pricing issues, billing errors,

customer credit issues and so

forth

• Discrepancies can cause

escheatment/unclaimed

property issues for customer

credit balances

# and $ value of customer payment

discrepancies

The Accounts Receivable and Order-to-Cash Expo Conference is produced by: 12 3/31/2016

Metric: Unearned

Cash Discount by

Customer

• Unearned cash discount is cash

“left on the table”

• Determine what customers are

taking discount outside of

discounted terms

• When tracked by customer it

allows better information for

payment term and pricing

negotiations

# and $ value of discount amount

taken by customers outside of

discount payment terms