Most AR dashboards track dozens of metrics. The problem? When everything is a priority, nothing is. After working with hundreds of UK businesses, we've identified the six numbers that actually predict cash flow outcomes.
1. Days Sales Outstanding (DSO)
What it measures: The average number of days it takes to collect payment after a sale.
Why it matters: DSO is the single best indicator of your credit control effectiveness. A DSO of 45+ means you're essentially financing your customers' businesses for free.
Under 30 days
How to improve it: Automate your first reminder to go out within 24 hours of an invoice becoming overdue. This alone can drop DSO by 10–15 days.
2. Collection Effectiveness Index (CEI)
What it measures: The percentage of receivables you successfully collect in a given period. CEI = (Beginning Receivables + Credit Sales – Ending Total Receivables) / (Beginning Receivables + Credit Sales – Ending Current Receivables) × 100.
Why it matters: Unlike DSO, CEI accounts for new sales volume. A high DSO with a high CEI means you have a timing problem, not a collection problem.
Above 80%
How to improve it: Focus on the gap between CEI and 100%. That gap represents money you're consistently failing to collect — the invoices that slip through the cracks.
3. Ageing Bucket Concentration
What it measures: What percentage of your receivables sit in each ageing bracket: current, 1–30, 31–60, 61–90, and 90+ days overdue.
Why it matters: The probability of collecting a debt drops dramatically after 60 days. If more than 15% of your receivables are in the 60+ bracket, you have a systemic problem.
Less than 10% over 60 days
How to improve it: Set up escalation triggers: different messaging, channels, and urgency levels for each ageing bracket. Don't treat a 90-day debt the same as a 7-day one.
4. Bad Debt Ratio
What it measures: Write-offs as a percentage of total credit sales.
Why it matters: This is the ultimate outcome metric. A rising bad debt ratio means your entire credit control process is failing — from customer vetting to collections.
Below 1.5%
How to improve it: Trace every write-off back to its root cause. Was it a credit decision problem (shouldn't have extended terms) or a collection problem (didn't chase effectively)?
5. First Contact Resolution Rate
What it measures: Percentage of overdue invoices paid after the first reminder.
Why it matters: This measures the quality of your reminder process. A low rate means your reminders are too weak, too late, or going to the wrong person.
Above 40%
How to improve it: A/B test your first reminder: timing (day of week, time of day), channel (email vs SMS), and tone (friendly vs formal). Small improvements here have outsized impact.
6. Cost Per £1 Recovered
What it measures: Total credit control costs (staff time, tools, legal fees) divided by total amount recovered.
Why it matters: If it costs you £0.25 to recover each £1, you're spending a quarter of your recovered revenue on the process. That's unsustainable.
Below £0.05 per £1
How to improve it: Automate the high-volume, low-complexity work (standard reminders, payment plan offers) and reserve human attention for complex cases.
The takeaway
Track these six metrics weekly. Ignore everything else. If all six are in the green zone, your accounts receivable process is working. If any are red, you know exactly where to focus.
See your AR KPIs in real time
AutoSettle's recovery analytics dashboard tracks all six of these KPIs automatically — plus debtor-level intelligence and payment behaviour scoring.
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