Receivables Overdue Amount or AR Overdue Amount is a KPI that indicates payments that are yet to be received by the organization that are past due date as agreed upon in the invoice.
As part of sales process, Customers are given a grace period before any payment is due, which is negotiated in advance and explicitly mentioned in each and every Invoice. For example, if customer has payment terms as 30 days and Invoice was created on 1-Apr-2016, the due date for payment without any penalties will be 1-May-2016.
It indicates the effectiveness of Sales & Collection process at a high level and gives insight into customer deliquency. In general, the KPI triggers an action to prioritize an overdue invoice for collection, correction or writeoff based on scenario.
This is a time context sensitive measure and looks at the current date or report execution date agaist invoice due date to arrive at final value. The “Due Date” plays critical role in computation logic of several AR based KPI’s as we will see in other posts.
AR Overdue Amount is always reported as a point in time KPI with a specific date as example below. Trend of AR Overdue is not possible directly due to the non-cumulative nature of finance measures.
AR Overdue (as of 1-May-2016): $ 456,732