O2C Performance Metrics: Measure to Manage
Organizations may differ regarding what is most important in achieving AR’s strategic objectives, but the methods they use to determine their metrics and key performance indicators (KPIs) are similar.
Metrics identify the current status of performance in the AR operation. They help set improvement goals and track progress toward those goals. For these reasons, what is measured is generally better managed.
That’s why it’s so important for AR operations (as well as each of the other functions within the order-to-cash, or O2C, process) to establish a solid set of performance metrics and track them on a consistent basis. Only then can AR managers identify trends pointing to a need for analysis, troubleshooting, and procedural improvement—and keep the overall O2C process running smoothly and effectively.
In establishing metrics and benchmarking performance, it is important to follow these basic principles:
- Clarify and articulate your priorities and objectives;
- Ensure that activities and initiatives are in place to achieve those priorities and objectives;
- Monitor progress on an ongoing basis and benchmark against past performance;
- Adjust your strategy as necessary to achieve continuous improvement; and
- Phase out and ...