{"id":577,"date":"2023-08-09T07:57:19","date_gmt":"2023-08-09T07:57:19","guid":{"rendered":"https:\/\/atlanticrcm.com\/blog\/?p=577"},"modified":"2023-08-07T07:58:36","modified_gmt":"2023-08-07T07:58:36","slug":"common-ar-recovery-metrics-and-how-to-use-them","status":"publish","type":"post","link":"https:\/\/atlanticrcm.com\/blog\/common-ar-recovery-metrics-and-how-to-use-them\/","title":{"rendered":"Common AR Recovery Metrics and How to Use Them"},"content":{"rendered":"

Accounts receivable (A\/R) recovery<\/a> is an important aspect of any business, as it is necessary to collect outstanding debts to maintain a positive cash flow. However, monitoring A\/R recovery can be a daunting task for businesses. That’s where A\/R recovery metrics come in handy. These metrics help businesses monitor their A\/R recovery performance and make data-driven decisions to improve their recovery process. We’ll discuss some common A\/R recovery<\/a> metrics and how to use them effectively.<\/p>\n

    \n
  1. Days Sales Outstanding (DSO)<\/strong><\/li>\n<\/ol>\n

    Days Sales Outstanding (DSO) is a commonly used A\/R<\/a> recovery metric that measures the average number of days it takes for a business to collect payment after a sale is made. The formula for calculating DSO is: (Accounts Receivable \/ Total Credit Sales) x Number of Days in Period. The lower the DSO, the faster the business is collecting payments from customers.<\/p>\n

    To use DSO effectively, businesses should compare their DSO to industry standards to identify areas for improvement. Additionally, businesses can use DSO to track the effectiveness of their A\/R recovery efforts over time<\/a>.<\/p>\n

      \n
    1. Collection Effectiveness Index (CEI)<\/strong><\/li>\n<\/ol>\n

      The Collection Effectiveness Index (CEI) is another important A\/R recovery<\/a> metric that measures the effectiveness of a business’s collection efforts. The formula for calculating CEI is: [(Beginning Accounts Receivable + Credit Sales – Ending Accounts Receivable) \/ (Beginning Accounts Receivable + Credit Sales – (Current Period Average Accounts Receivable))] x 100. A higher CEI indicates that a business is collecting its outstanding debts more effectively.<\/p>\n

      To use CEI effectively, businesses should monitor their CEI regularly to identify trends and make data-driven decisions to improve their A\/R recovery process. Additionally, businesses can compare their CEI to industry standards to identify areas for improvement.<\/p>\n

        \n
      1. Bad Debt Percentage<\/strong><\/li>\n<\/ol>\n

        The Bad Debt Percentage is a measure of the amount of debt that a business is unable to collect. The formula for calculating Bad Debt Percentage is: (Total Bad Debt \/ Total Credit Sales) x 100. A lower Bad Debt Percentage indicates that a business is collecting its outstanding debts effectively.<\/p>\n

        To use Bad Debt Percentage effectively, businesses should monitor their Bad Debt Percentage regularly to identify trends and make data-driven decisions to improve their A\/R recovery process. Additionally, businesses can compare their Bad Debt Percentage to industry standards to identify areas for improvement.<\/p>\n

          \n
        1. Accounts Receivable Turnover<\/strong><\/li>\n<\/ol>\n

          The Accounts Receivable Turnover metric measures how many times a business’s accounts receivable is converted into cash during a period. The formula for calculating Accounts Receivable Turnover is: (Net Credit Sales \/ Average Accounts Receivable). A higher Accounts Receivable Turnover indicates that a business is collecting its outstanding debts more effectively.<\/p>\n

          To use Accounts Receivable Turnover effectively, businesses should monitor their Accounts Receivable Turnover regularly to identify trends and make data-driven decisions to improve their A\/R recovery process. Additionally, businesses can compare their Accounts Receivable Turnover to industry standards to identify areas for improvement.<\/p>\n

          Monitoring A\/R recovery metrics is crucial for any business that wants to improve its A\/R recovery process. By using these metrics effectively, businesses can identify areas for improvement and make data-driven decisions to improve their A\/R recovery performance.<\/p>\n

           <\/p>\n","protected":false},"excerpt":{"rendered":"

          Accounts receivable (A\/R) recovery is an important aspect of any business, as it is necessary to collect outstanding debts to maintain a positive cash flow. However, [\u2026]<\/span><\/p>\n","protected":false},"author":1,"featured_media":578,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-577","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blogs"],"yoast_head":"\nCommon AR Recovery Metrics and How to Use Them - Atlantic RCM<\/title>\n<meta name=\"description\" content=\"Accounts receivable (A\/R) recovery is an important aspect of any business, as it is necessary to collect outstanding debts to maintain a positive cash\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/atlanticrcm.com\/blog\/common-ar-recovery-metrics-and-how-to-use-them\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Common AR Recovery Metrics and How to Use Them - 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