Unlock Your Accounts Receivable KPIs With a Custom Dashboard

Introduction

A dashboard is an advanced analytics and business intelligence (BI) tool used to track and monitor key performance indicators (KPIs) of a company's financial performance. Dashboards make it easy to quickly visualize and identify changes in data, allowing teams to make informed decisions more quickly and efficiently.

Specifically, monitoring accounts receivable KPIs is especially important as it can help companies ensure efficient cash flow management and prevent issues with late payments. Some examples of accounts receivable KPIs include days sales outstanding (DSO), account receivable turn, invoice aging, and collection period.

Identifying the Most Important KPIs to Monitor

For your business to be profitable and successful, you need to monitor your accounts receivable KPIs. To get accurate and consistent summaries of your accounts receivable performance, you need to determine which KPIs are the most important to track. In this article, we will cover choosing the right metrics and potential accounts receivable KPIs.

Choosing the Right Metrics

When it comes to choosing which KPIs to measure, it is important to look at the big picture. With a little bit of effort, you can quickly narrow down the list of KPIs. Consider the following questions when determining the most important metrics to track:

What information is the most important to you?
What actionable insights can be provided by the data?
What trends and patterns can be identified from the data?
What areas need improvement in terms of accounts receivable?

Once you have answered these questions, you can begin to select the most important KPIs for your business. Keep in mind that it may be necessary to adjust your selection of KPIs as business needs and goals evolve.

Potential Accounts Receivable KPIs

Now that you have identified the most important KPIs to monitor, you can start by considering the potential accounts receivable KPIs. Here are some of the most common accounts receivable KPIs:

Average Days in Accounts Receivable
Unpaid vs. Paid Accounts Receivable Balance
Outstanding Balance of Accounts Receivable
Outstanding Vs. Current Accounts Receivable Ratio
Bad Debt Write-offs

These accounts receivable KPIs give you quick insights into the performance of your accounts receivable department. Any deviation from expected results could imply issues and inefficiencies in your accounts receivable process. As such, you should use these metrics to monitor your accounts receivable performance and identify areas for improvement.

Setting Up a Dashboard to Monitor Accounts Receivable KPIs

Establishing Dashboard Parameters

Setting up a dashboard to monitor accounts receivable KPIs requires careful consideration of the parameters that will be used to define the dashboard. Depending on the size and complexity of the organization, the types of parameters that need to be established may vary. Generally, the parameters should include an agreed-upon system of accounts receivable, such as an accounts receivable ledger and an accounts receivable aging schedule. Other criteria that should be established include the number of days that an invoice can remain outstanding before a reminder is sent, and how overdue invoices should be categorized.

Including Relevant Financial Reporting

Once the parameters for the dashboard have been established, the next step is to include relevant financial reporting. The information that should be included will depend on the specific KPIs being monitored, but generally will include:

Outstanding accounts receivable information, including the total amount, aging of receivables, and frequency of invoices.
Billing and collection information, such as the number of invoices billed and the amount of payments received.
Accounts receivable turnover information, such as the number of receivables per period, the average collection period, and the accounts receivable turnover ratio.
Information on customer payments and accounts, including payment history, overdue accounts, and disputed items.
Reporting on any discrepancies between accounts receivable and billing, as well as any unapproved accounts receivable activities.

In addition to this information, the dashboard should also include performance metrics to track the progress of the accounts receivable KPIs. These may include tracking the number of accounts in arrears and the percentage of accounts paid on time. Other metrics may include the average payment period, the number of days taken for payment, and the percentage of disputed and past due accounts.

Integrating Data

An effective accounts receivable (AR) dashboard, which gathers, organizes, and presents data to help your organization track KPIs like total receivables, aging categories, and days sales outstanding (DSO), depends on the integration of multiple data sources. But building and maintaining manual integrations or siloed data islands can require significant resources, energy, and time. Automating data collection and connecting to external data sources are essential components of a comprehensive AR dashboard.

Automating Data Collection

Integrating fragmented sources of customer and financial data, such as invoices and payments, and customer contracts, is key to generating a comprehensive view of all your financial processes. Automating the data collection process can empower your team to reduce errors, improve compliance, and generate insights in real-time.

Connecting to External Data Sources

In addition to automating the data collection process within your organization, it’s also essential to connect to external data sources. By connecting to third-party data sources, such as online payment providers, social media, or email services, you can gain additional visibility into customer account activity, financial risk, customer sentiment, or customer engagement with your services.

Payment integrations. Integrating with online payment providers enables you to access real-time payment records to improve your accounts receivable management processes.
Social media. Listening to customer and prospect interactions on social networks can deliver a more comprehensive view of customer sentiment and behaviour across your lifecycle.
Email. Sending out customer-specific emails and tracking responses can help you understand customer sentiment and potential sales opportunities.

Building a Custom Dashboard

Building a custom dashboard for monitoring your accounts receivable KPIs is a great way to ensure that you have up-to-date and valuable insights into your receivable performance. A custom dashboard can be tailored to suit your specific needs and generate data insights to aid in decision-making.

Designing the Dashboard Template

When designing a dashboard template for accounts receivable KPIs, it is important to ensure that it displays the information clearly and in a way that is easy to understand and analyze. This information should be displayed in an organized, visually appealing layout and include elements such as charts and graphs to better understand and evaluate changes in the KPI trend.

The dashboard should focus on the most important KPIs and should be structured to include the key information that can help inform decisions and improve receivables performance. A dashboard should also use drilldowns, allowing users to view more granular data and understand the underlying trends.

Applying Visuals and Filters

Visuals and filters are essential when designing a dashboard to monitor accounts receivable KPIs. Visual components, such as charts and graphs, can help to quickly identify meaningful trends in the data and make it easier to understand the performance data. Filters can be used to narrow down the data and focus on specific aspects of the KPI, such as certain time periods or customers.

It is also important to make sure that the dashboard is customizable and that the data can be filtered and sorted in various ways to allow for easy access to the pertinent information. This is important for deriving meaningful insights from the data, as it allows users to quickly and easily identify areas of strength and opportunity.

Interpreting Dashboard Reports

Interpreting dashboard reports is the key to uncovering insights and understanding the performance of your accounts receivable KPIs. It informs data-driven decisions that can help direct the strategy of your accounts receivable process. By understanding the performance of your KPIs, businesses can make data-driven decisions with actionable insights.

Understanding the KPI Performance

The insights provided by a dashboard report can provide a detailed view of the performance of each accounts receivable KPI. This can help businesses identify areas of strength and weakness and inform decision-making. Businesses can look at the performance of both current and historical KPIs to gain an understanding of how their accounts receivable process is performing.

Using visualizations and other graphical representations, businesses can easily understand the performance of each KPI and identify any anomalies that need to be addressed. Dashboards also allow businesses to compare the performance of their accounts receivable KPIs against industry benchmarks to ensure they are on track.

Taking Data-Driven Actions

Once businesses understand the performance of each accounts receivable KPI, they can use the data to inform their decision-making process. Armed with actionable insights, businesses can develop, implement and track data-driven strategies designed to improve the performance of their accounts receivable process.

With the right data-driven decisions in place, businesses can improve their accounts receivable process, reduce costs, and prevent potential issues before they arise. Dashboards are a powerful tool that can help businesses monitor the performance of their accounts receivable KPIs to ensure they are meeting their goals.

Conclusion

Businesses of all sizes can benefit from tracking and monitoring their accounts receivable KPIs with the help of a dashboard. Dashboards allow business owners, financiers, and accounts receivable teams to track performance in real time and make appropriate decisions to ensure the financial health of the company. Dashboard setup is a simple process that requires a data source and software solution with the ability to visualize data. Once set up, dashboards allow for real-time insight into the essential accounts receivable KPIs such as DSO, bad debt expense, and aging trend analysis.

Recap of the Dashboard Setup Process

The dashboard setup process requires a data source and software solution with the ability to visualize data. It can be broken down into several steps:

Connect a data source, such as a CSV file, to the software solution.
Construct a report that visualizes key performance indicators.
Format and customize the report dashboards to display the KPIs.
Configure the dashboards to refresh automatically.

Benefits of Monitoring Accounts Receivable KPIs with a Dashboard

The primary benefit of monitoring accounts receivable KPIs with a dashboard is the increased visibility and actionable insight. Dashboards provide an easy-to-use platform to view essential KPIs that would otherwise be hidden in data silos. With an updated dashboard, business owners, financiers, and accounts receivable teams can maintain timely alerts and insights into the company’s financial health.

Dashboards can also be used to generate reports that can inform accounts receivable trends and be used to create projections and forecasts. This ensures that accounts receivable teams are always aware of shortfalls and opportunities, helping to guarantee a steady financial position.

Excel Dashboard