Staying on top of invoicing and billing for a business requires more than just keeping cash flows straight. It takes insight—and valuable time. By focusing on a few key receivables indicators, you can get a clearer view of what’s working, what’s slowing you down, and where there’s room for improvement.
9 Key Indicators in Receivables That Actually Matter
Tracking receivables doesn’t have to feel like a heavy lift. Here are nine KPIs for accounts receivable every bookkeeper should have on their radar. Each of these key metrics for AR measurement is packed with value, but more than that, it’s worth knowing just what they can tell you about financial performance.
1. Days Sales Outstanding (DSO)
What it is: The average number of days it takes customers to pay their invoices.
Why it matters: A lower DSO means cash is coming in quickly. This gives you the flexibility to invest, pay bills, or cover payroll without stress. A high DSO can signal trouble: customers may be taking too long to pay, or your invoicing process might be slowing things down.
How to improve it: Leveraging features like these can shave days off your DSO:
- Automated reminders
- Faster invoice delivery
- Real-time tracking
For example, a service company that sends invoices immediately after a job is completed (instead of at the end of the week) could see payments come in significantly faster.
2. Invoice Aging Report
What it is: A categorized breakdown of outstanding invoices based on how long they’ve been overdue (e.g., 0–30, 31–60 days, etc.).
Why it matters: This report helps you prioritize collection efforts and flag accounts that may require follow-up or even escalation. An increase in older invoices—especially in the 60+ day range—can indicate potential write-offs or cash flow risks.
How to improve it: Visibility is key. A clean, customizable dashboard that updates in real time can help you flag problem accounts early and avoid write-offs.
3. Cost of Invoice Processing
What it is: The total time, money, and effort it takes to create, send, and manage invoices.
Why it matters: Hours spent manually copying data into invoices or following up on payments is time you’re not spending on growing your business. Those costs add up.
How to improve it: Automating repetitive steps (like recurring billing or invoice generation) reduces labor costs and human error. With the right setup, a business that used to dedicate a full workday each week to invoicing could reduce it to 30 minutes.
4. Invoice Conversion Rate
What it is: The percentage of invoices that get paid without additional reminders or follow-up.
Why it matters: A high conversion rate usually means your invoices are clear, convenient, and easy to act on. If your rate is low, it might be time to rework your process.
How to improve it: Make paying seamless. Accept multiple payment methods, embed payment buttons directly in the invoice, and ensure the process works smoothly on mobile.
5. Customer Payment Behavior
What it is: A look at how individual customers tend to pay—early, on time, or consistently late.
Why it matters: Identifying patterns helps you get ahead of potential issues. If a longtime customer suddenly starts paying late, that could signal financial trouble.
How to improve it: Centralized reporting makes it easier to spot trends and reach out to customers proactively. You might decide to adjust terms or offer incentives to customers who consistently pay early.
6. Email Open and Response Rate
What it is: A metric to gauge whether your emailed invoices are being seen and acted upon.
Why it matters: While not a key indicator of receivables performance, this one is useful for understanding engagement with invoicing communications. Low open or response rates can signal issues with deliverability, subject lines, or timing—and may help explain delayed payments.
How to improve it: Use clear subject lines, recognizable sender names, and mobile-friendly templates. Including direct payment links or buttons can encourage faster action. Tools that monitor email activity help you pinpoint issues and refine your strategy for better results.
7. Receivables Turnover Ratio
What it is: A measure of how often you collect on your receivables during a given period (like a quarter or year).
Why it matters: The higher the turnover, the better your cash flow. A low ratio might indicate problems in your credit policy or collection process.
How to improve it: Faster invoicing, better customer communication, and automated follow-ups can help turn this number around without increasing the workload.
8. Collection Effectiveness Index (CEI)
What it is: A key metric for AR measurement that tracks how successful your team is at collecting receivables during a specific period.
Why it matters: Unlike DSO, CEI factors in beginning receivables, credit sales, and ending receivables to give a performance-based view of your collection process. CEI closer to 100% means you’re collecting nearly all that’s owed. Anything significantly lower might signal a bottleneck.
How to improve it: Strengthen follow-up strategies, set consistent collection policies, and streamline invoice delivery. Tools that centralize AR data and automate reminders can also help close the gap between what’s billed and what’s collected.
9. Cash Flow Forecasting
What it is: A projection of how much money will come in (and go out) over a set period.
Why it matters: This helps you plan for expenses, identify shortfalls before they happen, and make informed financial decisions. Forecast accuracy—regularly comparing projections to actuals—can help refine your process and improve planning over time.
How to improve it: Use historical data to inform your projections, and revisit your forecasts regularly to adjust for changes in payment behavior or seasonality. AR dashboards that consolidate receivables and payment timelines can also make your forecasts more reliable and easier to update.
Let These Key Indicators in Receivables Work for You
Listen, you don’t need to memorize every finance term to take control of your receivables. Tracking these key receivables indicators can give you a clearer view of your cash flow, and you can get paid faster—with less back and forth. Chargezoom takes it even further. With Chargezoom, you can skip the spreadsheets and manual follow-ups and move to a smarter, faster way to handle invoicing.
Want to see how it works? Take a quick look at our online payment terminal or explore how Chargezoom helps accelerate cash flow. Discover faster, smarter receivables from start to finish.
