Whether you’re a collection agency or a B2B business, you know you must track accounts receivable to confirm the business is operating well. Visualizing the data about your company gives insights about whether you’re setting the right credit terms, how much bad debt the company has, whether collections are occurring on time, and if not, how late, and even how individual team members are performing. Without these data points as guides, your executive team is not able to make decisions about the business.
But which metrics are important? Fancy dashboard software offers a lot of options; some are useful while others aren’t. Here are four we find valuable.
Four Data Points for Your A/R Status Reports
- Days deductions outstanding – Your company might call them deductions, chargebacks, or short pays. Whatever your terminology, knowing this will help your team determine the company’s bottom line. Keep track of the growth of these deductions to keep them in check.
- Days sales outstanding – Sometimes listed as DSO, this metric is important because it demonstrates how quickly you’re collecting cash — which relates to your company’s efficiency and profitability. Lack of cash flow can break a company; the faster you collect, the faster you can reinvest or improve production and of course, pay your bills!
- Receivables aging by payer – Sorting all your metrics by different variables will show you all sorts of things. You definitely want a way to sort your receivables aging by the payer so you can see trends in denials, registration errors, billing, and more. As you work with customers, you can spot-check your billing relationship with them and adjust contracts as needed.
- Activities by collector – Certainly you want to make sure all your team members are working efficiently (and working in general). Examining this data point also offers other insights, such as how you approach appeals, denials, coding/registration issues, etc. It also gives forecasting for future payments and productivity results from your staff.
If you have questions about your AR process, we’re here to help! Contact us to ask your question.