accounts receivable performance review multiple divisions credit controllers-apr2015
TRANSCRIPT
Accounts Receivable
Performance ReviewA Case Study of
Jan 2015
Copyright 2014 Mantramax Pty Ltd -
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A Case Study of
Multiple Divisions/Credit Controllers
Contents
1. Introduction
2. System Data
3. Performance Review Division/Credit Controller 1
4. Performance Review Division/Credit Controller 2
5. Performance Review Division/Credit Controller 35. Performance Review Division/Credit Controller 3
6. Performance Review Division/Credit Controller 4
7. Performance Review Group/Company
8. Summarised Results Group/Company
9. Contacts
Copyright 2014 Mantramax Pty Ltd -
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All benchmarks in this case study use the Mantramax methodology
benchmarking Accounts Receivable against Internal Credit Terms
1. Introduction
Performance Reviews of multiple companies within a group or credit controller within a
company is complicated by many factors :
1. Fluctuating Monthly Turnover values
2. Varying Credit Terms of each customer making up these values
The most used benchmark is against the Industry Standard, which is an average median
calculated periodically. In Diverse Industries or Companies with a broad customer base,
this benchmark can skew comparisons for individual companies or credit controllers.
The case study in this publication illustrate the monthly fluctuation compared to theThe case study in this publication illustrate the monthly fluctuation compared to the
Industry Standard for each individual Debtors Book. Fluctuating Monthly Turnover and
Payment Term mix were used showcase the effect within a diverse environment.
The Age Analysis balances for each Debtors Book were calculated in a uniform manner
for consistency :
Current 1-30 days 100%
31-60 days 75%
61-90 days 40%
91-120 days 20%
121+ days 15%
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2.1 System Data - Turnover
Group/Company Annual Turnover incl VAT
Division/Credit Controller 1 R 120 000 25%
Division/Credit Controller 2 R 200 000 42%
Division/Credit Controller 3 R 70 000 15%
Division/Credit Controller 4 R 90 000 19%
Total Turnover incl VAT Group/Company R 480 000 100%
Turnover incl VAT Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1 R 10 000 R 8 000 R 12 000 R 6 000 R 14 000 R 10 000
30 days Invoice R 2 500 R 2 800 R 5 400 R 2 100 R 3 500 R 1 500
30 days Statement R 5 000 R 3 200 R 3 600 R 1 200 R 5 600 R 6 000
60 days Statement R 2 500 R 2 000 R 3 000 R 2 700 R 4 900 R 2 500
Division/Credit Controller 2 R 16 667 R 20 000 R 10 000 R 23 333 R 13 333 R 16 667
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Division/Credit Controller 2 R 16 667 R 20 000 R 10 000 R 23 333 R 13 333 R 16 667
7 days Invoice R 7 500 R 7 000 R 2 500 R 3 500 R 3 333 R 2 500
30 days Statement R 5 000 R 4 000 R 1 000 R 4 667 R 4 000 R 6 667
45 days Invoice R 4 167 R 9 000 R 6 500 R 15 167 R 6 000 R 7 500
Division/Credit Controller 3 R 5 833 R 8 167 R 4 667 R 7 000 R 3 500 R 5 833
30 days Statement R 1 458 R 2 450 R 1 633 R 2 800 R 1 575 R 2 917
45 days Invoice R 2 625 R 3 267 R 1 633 R 2 100 R 875 R 1 167
60 days Statement R 1 750 R 2 450 R 1 400 R 2 100 R 1 050 R 1 750
Division/Credit Controller 4 R 7 500 R 6 000 R 9 000 R 4 500 R 10 500 R 7 500
60 days Statement R 6 000 R 4 800 R 7 200 R 3 600 R 8 400 R 6 000
90 days Statement R 750 R 300 R 1 350 R 225 R 1 575 R 375
120 days Statement R 750 R 900 R 450 R 675 R 525 R 1 125
Total Turnover - Group/Company R 40 000 R 42 167 R 35 667 R 40 833 R 41 333 R 40 000
2.2 System Data – Debtors Age Analysis
Debtors Age Analysis Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1
Current 1-30 days R 10 000 R 8 000 R 12 000 R 6 000 R 14 000 R 10 000
31 -60 days R 7 500 R 6 000 R 9 000 R 4 500 R 10 500
61-90 days R 4 000 R 3 200 R 4 800 R 2 400
91-120 days R 2 000 R 1 600 R 2 400
120+ days R 1 500 R 1 200
Total R 10 000 R 15 500 R 22 000 R 20 200 R 26 400 R 26 500
Division/Credit Controller 2
Current 1-30 days R 16 667 R 20 000 R 10 000 R 23 333 R 13 333 R 16 667
31 -60 days R 12 500 R 15 000 R 7 500 R 17 500 R 10 000
61-90 days R 6 667 R 8 000 R 4 000 R 9 333
91-120 days R 3 333 R 4 000 R 2 000
120+ days R 2 500 R 3 000
Total R 16 667 R 32 500 R 31 667 R 42 167 R 41 333 R 41 000
Division/Credit Controller 3
Current 1-30 days R 5 833 R 8 167 R 4 667 R 7 000 R 3 500 R 5 833
31 -60 days R 4 375 R 6 125 R 3 500 R 5 250 R 2 625
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31 -60 days R 4 375 R 6 125 R 3 500 R 5 250 R 2 625
61-90 days R 2 333 R 3 267 R 1 867 R 2 800
91-120 days R 1 167 R 1 633 R 933
120+ days R 875 R 1 225
Total R 5 833 R 12 542 R 13 125 R 14 933 R 13 125 R 13 417
Division/Credit Controller 4
Current 1-30 days R 7 500 R 6 000 R 9 000 R 4 500 R 10 500 R 7 500
31 -60 days R 5 625 R 4 500 R 6 750 R 3 375 R 7 875
61-90 days R 3 000 R 2 400 R 3 600 R 1 800
91-120 days R 1 500 R 1 200 R 1 800
120+ days R 1 125 R 900
Total R 7 500 R 11 625 R 16 500 R 15 150 R 19 800 R 19 875
Debtors Age Analysis - Group/Company
Current 1-30 days R 40 000 R 42 167 R 35 667 R 40 833 R 41 333 R 40 000
31 -60 days R 0 R 30 000 R 31 625 R 26 750 R 30 625 R 31 000
61-90 days R 0 R 0 R 16 000 R 16 867 R 14 267 R 16 333
91-120 days R 0 R 0 R 0 R 8 000 R 8 433 R 7 133
120+ days R 0 R 0 R 0 R 0 R 6 000 R 6 325
Total Debtors Age Analysis - Group/Company R 40 000 R 72 167 R 83 292 R 92 450 R 100 658 R 100 792
3. Performance Review Division/Credit Controller 1
Company X
Division/Credit Controller 1
A/R Performance Measurement Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Debtors Days - By Ageing Bucket 30.42 53.23 65.40 71.48 76.04 76.04
Debtors Days - Average Sales Method (3 months) 30.00 51.67 66.00 69.92 74.25 79.50
Days Sales Outstanding (DSO) 28.00 52.00 66.60 69.53 77.00 73.92
Best Possible Days Sales Outstanding (BPDSO) 28.00 31.00 30.00 31.00 30.00 31.00
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Delinquent Days Sales Outstanding (DSSO) 0.00 21.00 36.60 38.53 47.00 42.92
Days Sales Outstanding Benchmark (DSOB) 28.00 44.55 45.67 52.92 44.54 51.68
Delinquency Index (DSO/DSOB) 100.00% 116.73% 145.83% 131.38% 172.88% 143.04%
Delinquency Improvement Target (DSO to DSOB) 0.00% 14.33% 31.43% 23.89% 42.15% 30.09%
Accounts Receivable Performance Values
Total Debtors Book Value R 10 000 R 15 500 R 22 000 R 20 200 R 26 400 R 26 500
Debtors Delinquency Index Target Value R 0 R 2 221 R 6 914 R 4 825 R 11 129 R 7 973
DSOB Value R 10 000 R 13 279 R 15 086 R 15 375 R 15 271 R 18 527
4. Performance Review Division/Credit Controller 2
Company X
Division/Credit Controller 2
A/R Performance Measurement Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Debtors Days - By Ageing Bucket 30.42 53.23 65.40 71.48 76.04 76.04
Debtors Days - Average Sales Method (3 months) 30.00 53.18 61.07 71.16 79.71 69.19
Days Sales Outstanding (DSO) 28.00 52.00 63.80 74.69 75.00 75.61
Best Possible Days Sales Outstanding (BPDSO) 28.00 31.00 30.00 31.00 30.00 31.00
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Delinquent Days Sales Outstanding (DSSO) 0.00 21.00 33.80 43.69 45.00 44.61
Days Sales Outstanding Benchmark (DSOB) 28.00 40.28 45.76 36.13 46.34 40.66
Delinquency Index (DSO/DSOB) 100.00% 129.08% 139.44% 206.75% 161.86% 185.95%
Delinquency Improvement Target (DSO to DSOB) 0.00% 22.53% 28.28% 51.63% 38.22% 46.22%
Accounts Receivable Performance Values
Total Debtors Book Value R 16 667 R 32 500 R 31 667 R 42 167 R 41 333 R 41 000
Debtors Delinquency Index Target Value R 0 R 7 323 R 8 956 R 21 772 R 15 798 R 18 951
DSOB Value R 16 667 R 25 177 R 22 711 R 20 395 R 25 536 R 22 049
5. Performance Review Division/Credit Controller 3
Company X
Division/Credit Controller 3
A/R Performance Measurement Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Debtors Days - By Ageing Bucket 30.42 53.23 65.40 71.48 76.04 76.04
Debtors Days - Average Sales Method (3 months) 30.00 53.75 63.28 67.76 77.88 73.93
Days Sales Outstanding (DSO) 28.00 52.00 62.40 73.40 77.88 79.08
Best Possible Days Sales Outstanding (BPDSO) 28.00 31.00 30.00 31.00 30.00 31.00
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Delinquent Days Sales Outstanding (DSSO) 0.00 21.00 32.40 42.40 47.88 48.08
Days Sales Outstanding Benchmark (DSOB) 28.00 41.11 53.58 50.92 54.85 51.01
Delinquency Index (DSO/DSOB) 100.00% 126.49% 116.46% 144.14% 141.97% 155.05%
Delinquency Improvement Target (DSO to DSOB) 0.00% 20.94% 14.13% 30.63% 29.56% 35.50%
Accounts Receivable Performance Values
Total Debtors Book Value R 5 833 R 12 542 R 13 125 R 14 933 R 13 125 R 13 417
Debtors Delinquency Index Target Value R 0 R 2 627 R 1 855 R 4 573 R 3 880 R 4 764
DSOB Value R 5 833 R 9 915 R 11 270 R 10 360 R 9 245 R 8 653
6. Performance Review Division/Credit Controller 4
Company X
Division/Credit Controller 4
A/R Performance Measurement Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Debtors Days - By Ageing Bucket 30.42 53.23 65.40 71.48 76.04 76.04
Debtors Days - Average Sales Method (3 months) 30.00 51.67 66.00 69.92 74.25 79.50
Days Sales Outstanding (DSO) 28.00 52.00 66.60 69.53 77.00 73.92
Best Possible Days Sales Outstanding (BPDSO) 28.00 31.00 30.00 31.00 30.00 31.00
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Delinquent Days Sales Outstanding (DSSO) 0.00 21.00 36.60 38.53 47.00 42.92
Days Sales Outstanding Benchmark (DSOB) 28.00 46.56 57.93 67.64 64.25 65.25
Delinquency Index (DSO/DSOB) 100.00% 111.69% 114.96% 102.78% 119.84% 113.28%
Delinquency Improvement Target (DSO to DSOB) 0.00% 10.47% 13.01% 2.71% 16.55% 11.72%
Accounts Receivable Performance Values
Total Debtors Book Value R 7 500 R 11 625 R 16 500 R 15 150 R 19 800 R 19 875
Debtors Delinquency Index Target Value R 0 R 1 217 R 2 147 R 410 R 3 277 R 2 330
DSOB Value R 7 500 R 10 408 R 14 353 R 14 740 R 16 523 R 17 545
7. Performance Review Group/Company
Company X
All Divisions/Credit Controllers
A/R Performance Measurement Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Debtors Days - By Ageing Bucket 30.42 53.23 65.40 71.48 76.04 76.04
Debtors Days - Average Sales Method (3
months) 30.00 52.70 63.62 70.12 76.88 74.25
Days Sales Outstanding (DSO) 28.00 52.00 64.82 72.73 76.55 75.77
Best Possible Days Sales Outstanding (BPDSO) 28.00 31.00 30.00 31.00 30.00 31.00
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Delinquent Days Sales Outstanding (DSSO) 0.00 21.00 34.82 41.73 46.55 44.77
Days Sales Outstanding Benchmark (DSOB) 28.00 42.82 50.97 51.09 52.79 52.85
Delinquency Index (DSO/DSOB) 100.00% 121.44% 127.17% 142.36% 145.00% 143.37%
Delinquency Improvement Target (DSO to
DSOB) 0.00% 17.65% 21.36% 29.75% 31.04% 30.25%
Accounts Receivable Performance Values
Total Debtors Book Value R 40 000 R 72 167 R 83 292 R 92 450 R 100 658 R 100 792
Debtors Delinquency Index Target Value R 0 R 12 740 R 17 793 R 27 507 R 31 241 R 30 489
DSOB Value R 40 000 R 59 427 R 65 499 R 64 943 R 69 417 R 70 303
8.1 Summarised Results Group/Company
Days Sales Outstanding (DSO) Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1 28.00 52.00 66.60 69.53 77.00 73.92
Division/Credit Controller 2 28.00 52.00 63.80 74.69 75.00 75.61
Division/Credit Controller 3 28.00 52.00 62.40 73.40 77.88 79.08
Division/Credit Controller 4 28.00 52.00 66.60 69.53 77.00 73.92
Division/Credit Controller All 28.00 52.00 64.82 72.73 76.55 75.77
Industry Standard 60.00 60.00 60.00 60.00 60.00 60.00
Days Sales Outstanding (DSO)
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50.00
70.00
90.00
Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Days Sales Outstanding (DSO)
Division/Credit Controller 1 Division/Credit Controller 2
Division/Credit Controller 3 Division/Credit Controller 4
Division/Credit Controller All Industry Standard
Da
ys
Sa
les
8.2 Summarised Results Group/Company
Days Sales Outstanding Benchmark (DSOB) Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1 28.00 44.55 45.67 52.92 44.54 51.68
Division/Credit Controller 2 28.00 40.28 45.76 36.13 46.34 40.66
Division/Credit Controller 3 28.00 52.00 62.40 73.40 77.88 79.08
Division/Credit Controller 4 28.00 46.56 57.93 67.64 64.25 65.25
Division/Credit Controller All 28.00 42.82 50.97 51.09 52.79 52.85
85.00
Days Sales Outstanding Benchmark (DSOB)
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25.00
45.00
65.00
85.00
Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Days Sales Outstanding Benchmark (DSOB)
Division/Credit Controller 1 Division/Credit Controller 2
Division/Credit Controller 3 Division/Credit Controller 4
Division/Credit Controller All
Da
ys
Sa
les
8.3 Summarised Results Group/Company
Delinquency Index (DSO/DSOB) Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1 100% 117% 146% 131% 173% 143%
Division/Credit Controller 2 100% 129% 139% 207% 162% 186%
Division/Credit Controller 3 100% 126% 116% 144% 142% 155%
Division/Credit Controller 4 100% 112% 115% 103% 120% 113%
Division/Credit Controller All 100% 121% 127% 142% 145% 143%
Benchmark 100% 100% 100% 100% 100% 100%
Delinquency Index (DSO/DSOB)
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80%
180%
280%
Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Delinquency Index (DSO/DSOB)
Division/Credit Controller 1 Division/Credit Controller 2
Division/Credit Controller 3 Division/Credit Controller 4
Division/Credit Controller All Benchmark
De
lin
qu
en
cy I
nd
ex
8.4 Summarised Results Group/Company
Debtors Delinquency Index Target Value Feb 2014 Mar 2014 Apr 2014 May 2014 Jun 2014 Jul 2014
Division/Credit Controller 1 R 0 R 2 221 R 6 914 R 4 825 R 11 129 R 7 973
Division/Credit Controller 2 R 0 R 7 323 R 8 956 R 21 772 R 15 798 R 18 951
Division/Credit Controller 3 R 0 R 2 627 R 1 855 R 4 573 R 3 880 R 4 764
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Division/Credit Controller 4 R 0 R 1 217 R 2 147 R 410 R 3 277 R 2 330
Division/Credit Controller All R 0 R 12 740 R 17 793 R 27 507 R 31 241 R 30 489
The value of each of the individual Division/Controller’s target value is not equal to the
value of all the Divisions/Controller’s combined as the system benchmark the combined
data taking into account fluctuations in Monthly Turnover as well as Payment Term
changes.
8.5 Summarised Results Group/Company
Graphs interpretationsDays Sales Outstanding (DSO)
The DSO trend of all divisions/credit controllers are above the Industry Standard.
This indicate that the performance of each Debtors Book and the
Group/Company as a whole is worst than what is acceptable.
Days Sales Outstanding Benchmark (DSOB)
The DSOB trend line for the Group/Company indicate that Division/Controller 1
& 3 have a shorter payment cycle and Division/Controller 2 & 4 longer.
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& 3 have a shorter payment cycle and Division/Controller 2 & 4 longer.
Performance evaluation should therefore take this into account and will reflect in
the Delinquency Index.
Delinquency Index (DSO/DSOB)
Division/Controller 4 is the only one under the Group/Company index line
indicating a good performance. The remaining three Divisions/Controllers are
above the Group/Company index line and reflect a poor performance.
The Turnover Value of Division C is significantly higher and reflect appropriately in
the Delinquency Index Target Value.
9. Contacts
Contact me for Initial Reviews and Monthly
Reports for your company or clients:
Wessel Roux
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Wessel Roux
Cape Town, South Africa
Cell +27 (0) 82 852 9924
Fax +27 (0) 86 689 1093
Email [email protected]
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