Benchmarking the Credit and Accounts Receivable Functions

CRF presents a “Standards” Approach to Performance Improvement

Our survey illustrates important credit and A/R management data among companies and sets forth a method of comparing the data in a statistical benchmarking format.

Statistical Benchmarking links important credit and A/R management, workload, transaction and cost data among companies; and, portrays a comparative analysis by industry in table format for a multitude of metrics. This CRF report is recognized as the most comprehensive data of its kind.

CRF’s Statistical Benchmarking provides an excellent tool for credit, collections, and accounts receivable executives to develop and implement an accurate performance measuring process. CRF has been the leader in statistical benchmarking for the credit, A/R and related tasks for over a decade. We are currently on a data drive to accumulate current statistical data.

Please note, this example is sample data only.
Our data consists of hundreds of company records from a broad variety of industries. The data in this sample report is fabricated for illustration purposes only. Do not use it to benchmark yourself!

CRF’s benchmarking is the first step in determining where you are today. Our statistical study can present your data and compare your organization’s performance across:

  • All companies from all industries in our database;
  • Your own business unit group;
  • A specific industry in general or a specific industry group that you are a part of;
  • Workload volume;
  • Sales volume;
  • Transaction volume

CRF’s valuable data will help you:

  • Learn the Key Performance Metrics for success;
  • Establish goals and set strategies
  • Manage your resources;
  • Make more informed decisions;
  • Prioritize your improvement objectives;
  • Understand attainable goals;
  • Help you and your organization become more competitive.
  • CRF Premier Members can request one free benchmarking report inclusive with their annual membership.
  • Any company participating in the survey will receive the full report for FREE as a thanks for their data contribution to help make our service more valuable.
  • The cost to credit professionals or finance executives of manufacturing and distributing (wholesalers) companies who do not participate in the survey but want to purchase the full report is $500.00;
  • For all others the cost is $1,500.00

View a sample report. Take survey online or print a paper copy

The objective of the Credit Research Foundation in this initiative is three-fold:

  1. Information Clearing House – As a third party organization, CRF’s interest is to offer an opportunity for companies to exchange information, benchmark with each other on performance issues and, at the same time, ensure the confidentiality of data.
  2. Communication Link – INDUSTRY GROUP BENCHMARKING–While the objective of CRF’s benchmarking is to compare your company’s performance to the “universe of samples” and specifically against those in your related line of business, benchmarking can be a tool to familiarize you with your peers.
    To this end, if you are a member of an industry credit group, CRF can perform a specific benchmarking project for your group. This unique project will open the door to discussion of “best practices” within your group, and will lead to stimulating meeting topic discussion.
    Special Group discount pricing is available for this project. Contact us at the bottom of this page.
  3. Education – For those that are new to the benchmarking concept, it is hoped that this information will enhance your understanding of the role of benchmarking and its potential benefit to the credit, collection and accounts receivable functions.
    Our thanks to members of the Research Committee of CRF (credit executives from a variety of American companies) who have defined the terms used in the formulas so that the data can be collected and reported on a uniform basis.

CRF’s Benchmarking Report

The Benchmarking Report is a detailed report customized for each participant. The statistics below are arrived at by comparing an individual company’s performance in credit and collection against all companies in the CRF database. Those statistics are then compared to similar companies in the same industry.

CRF Metrics calculated are:

I. FINANCIAL PERFORMANCE METRICS
DSO
Best Possible DSO
Average Days Delinquent
Collection Effectiveness Index
Percent Current
Percent AR Greater Than 60 Days
Percent AR Greater Than 180 Days
Gross Bad Debt as % of Sales
Bad Debt Recovery as % of Sales
Net Bad Debt as % of Sales
Deductions as % of AR $
Deductions as % of AR items

II. CUSTOMER METRICS
Top 10 Customers as % of Sales
Top 20 Customers as % of Sales
Invoice Size
Number of Invoices Per Customer
Number of Active Customers
Primary Customer Type

III. DEDUCTION METRICS
Number of Deductions Processed Per Deduction Processing Employee
Deduction Processing Costs as % of Sales
Deduction Turnover
Deductions Salary Per Deductions Employee
Deductions as % of Sales
Deduction Balances Included in AR Portfolio

IV. EFFICIENCY METRICS
Various costs per transaction, employee, salary for Credit/Risk, Cash Application, Collections, etc.

V. OUTSOURCING METRICS
Percent of Workload that is Outsourced for Credit Risk, Cash Application, Collections, Deduction Processing, etc.

VI. COST ANALYSIS METRICS
Collection expenses
Outside Services
Outsourcing
Travel
Occupancy or Rent
IT Systems
Depreciation/Amortization
Total Cost as % of Sales, % of FTE Salary Benefits, Per Customer and Per Employee

VII. BUSINESS PRACTICES METRICS
% of Companies Charging Late Payment Fee
% of Companies that Accept Credit Cards
% of Companies Allowing Anticipation Payment Discount
% of Late Payment Charges Ultimately Collected
Annual $ of Credit Card Sales as % of Sales
Electronic Invoicing
Electronic Payments
Auto Write-off
Use of Auto-cash Systems including Auto-cash Hit Rates
$ Amount Shipped Automatically to New Customers with No Credit Investigation
% of Customers in Highest (Top Third) Risk Category

VIII. ORGANIZATIONAL STRUCTURE / RESPONSIBILITIES
Reporting Relationships
Where Various Functions are Primarily Performed within the Organization
Department Responsibilities

IX. SYSTEMS INFORMATION
AR or ERP Systems Used
Use of Bolt-on Deduction Management, Collection Management Systems and Credit Scoring Systems

Questions about our benchmarking?

I use the CRF benchmarking metrics to consistently measure our performance and they are a great tool for helping me set goals and objectives.

Stephen Strong

Manager Finance Operations, Google

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