What are some commonly-used cash application key performance indicators?

Checks processed per cash application personnel—the formula to calculate this metric is:

Actual number of checks processed / Total number of cash application personnel

Transactions per cash application personnel—the formula to calculate this metric is:

(Actual number of checks processed + Annual number of invoices processed + Annual number of credit memos processed + Number of deductions removed during a year) / Total number of cash application personnel

Sales per cash application personnel—the formula to calculate this metric is:

Annual credit sales / Total number of cash application personnel

Another, more complex cash application KPI is the cash conversion cycle (CCC). It is a metric that measures how long it takes to produce and sell a product or service, then convert it into cash. In a recent ARO2C performance metrics survey, 13 percent of the 180 respondents reported they tracked CCC. Ten percent of the participants included CCC in their top five metrics.

The formula used to calculate CCC is:

DIO + DSO - DPO

where DIO represents days inventory outstanding; DSO represents days sales outstanding; and DPO represents days payable outstanding.

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