In today’s global economy, cash is essential. Businesses that keep enough cash flowing can support their operations effectively. No matter the revenue generated, profit margins, or assets held, they hold little worth if these assets are not utilized efficiently.
When it comes to asset utilization, managing the Cash Operating Cycle (COC), which tracks how well a company turns investments into cash, is especially important. A powerful tool for this is an Accounts Receivable (AR) dashboard.
These dashboards can help your organization track, monitor and analyze key metrics like overdue invoices, customer payments, and receivable aging. By visualizing important KPIs such as Overdue by Entity, Credit Sales, and Cash Flow Trends, the dashboard can provide real-time insights into your organization’s financial health.
Accounts Receivable Trend Dashboard
Our Accounts Receivable Dashboard template gives a company-wide overview of your debtors, keeping track of the most important AR metrics.
What is Accounts Receivable?
Accounts Receivable is a major component of the Cash Operating Cycle (COC). Accounts Receivable represents the outstanding invoices or money owed by customers for goods or services delivered but not yet paid for, i.e. they are provided on credit. This amount is recorded as a current asset on the company’s balance sheet, indicating funds that the business expects to receive in the near future.
Why Keep Track of Accounts Receivable?
Effectively managing Accounts Receivable can prove to be helpful for maintaining a business’s financial health. Some key reasons to keep track of AR include:
- Evaluate Credit Policy: Monitoring AR can help assess the effectiveness of credit policies, where businesses can make adjustments to minimize payment delays and reduce the risk of bad debts.
- Accurate Invoicing and Payment Tracking: Maintaining detailed AR records helps ensure that all clients are billed appropriately and payments are tracked, which helps prevent revenue loss because of missed invoices or unnoticed unpaid accounts.
- Proof of Income for Tax Purposes: Detailed AR records ensure verifiable evidence of income, which is essential for accurate tax reporting and compliance.
Who is the End User of AR Dashboards?
Who is the End User of AR Dashboards?
An Accounts Receivable dashboard can be a valuable tool for different departments within a business, some end users of these AR dashboards are:
- Management: Management can utilize the AR dashboard to assess the company’s financial health and make strategic decisions.
- Finance Teams: They rely on the dashboard to track payments, identify overdue invoices, and manage cash flow.
- Sales Teams: Sales departments use the AR dashboard to monitor client’s payment compliance, understand customer credit behavior and maintain customer relationships.
Identifying Trapped Revenue in your Business
The AR dashboard provides a clear view of the total value of overdue invoices, enabling businesses to:
- Quantify Financial Exposure: Understand the exact amount of cash tied up in overdue payments and its proportion of total receivables.
- Assess Operational Impact: Evaluate how delayed payments are affecting working capital and the ability to meet operational or investment needs.
- Segment Overdue Invoices by Risk: Break down overdue amounts by aging buckets or customer categories to prioritize high-value or high-risk accounts.
By identifying and addressing overdue receivables promptly, businesses can unlock trapped cash, improve liquidity, and sustain healthy cash flow.
Breakdown of our AR Dashboard Template
Overdue by Entity (Pie Chart)
The pie chart offers a visual breakdown of overdue amounts across different entities, showing:
- Proportions: The share of total overdue invoices attributed to each entity.
- Focus Areas: Identifies entities contributing the most to overdue amounts, helping prioritize collection efforts.
This chart provides an intuitive, high-level overview for tracking and addressing overdue payments by entity.
Credit Sales, Paid, Balance, Current and Overdue (Card Visuals)
The card visuals in this our AR Dashboard detail the following:
- Credit Sales: Credit Sales refers to sales where customers or buyers are allowed to make payment later rather than payment at the time of purchase.
- Paid: Payments received against ‘credit sales’.
- Balance: Unpaid amount of credit sales (Credit sales – Paid)
- Credit Period: The credit period is the time frame a seller extends to a customer/buyer to make payment for goods or services after delivery.
- Current: Refers to the invoices that didn’t exceed the credit period.
- Overdue: Invoices past the due date.
Card visuals are perfect for summarizing the key metrics (e.g., Credit Sales, Balance) because they provide a quick, at-a-glance understanding. Each metric stands out clearly, making it easy for decision-makers to prioritize actions. When combined with slicers or filters (e.g., by customer, entity, or time), card visuals dynamically update to provide tailored insights.
Credit Sales vs Balance Due Trend (Column Chart)
- Stacked Columns: Shows Current, Overdue, and Paid amounts, illustrating payment status trends.
- Line Graph: Tracks Credit Sales each month, highlighting revenue performance over time.
The combined view helps compare sales with payment behavior on a month-to-month basis, identifying seasonal trends and potential issues.
Aging Bucket (Column Chart)
Aging Bucket categorizes outstanding invoices based on the duration of the delay.
These buckets provide critical insights by:
Offering a clear visual of payment patterns, aiding in better credit policy adjustments.
Highlighting the level of risk associated with delayed payments.
Enabling businesses to focus collection efforts on older, higher-risk invoices.
Using these categories in Power BI ensures a precise understanding of payment trends and empowers data-driven decision-making.
Top 10 Customer by Overdue (Bar Chart)
This chart highlights the top 10 customers with the highest overdue amounts, helping with:
- Comparative Overdue Values: Each bar represents a customer, making it easy to identify major contributors to overdue payments.
- Prioritization: Helps focus collection efforts on customers with the largest overdue balances.
It’s an effective tool for targeting high-risk accounts and improving cash flow management.
AR Details Table
A details table is essential for:
- Granular Insights: It provides a deep dive into individual customer metrics, like credit sales, payments, balances, and overdue percentages.
- Customer Accountability: Helps monitor payment behavior and identify customers contributing most to overdue amounts.
- Informed Decision-Making: Enables finance teams to prioritize follow-ups and adjust credit terms based on detailed customer data.
It’s a powerful tool for precise analysis and effective management of accounts receivable.
Tips to Manage Accounts Receivables Effectively
While monitoring key AR metrics can help prevent revenue loss to your business, here are some more techniques that you might consider implementing in your business operations to proactively prevent trapped funds from overdue invoices:
- Manage time scales: Work on reducing the time between the placement of an order and receipt of cash from the customer and eliminate any causes of disputes or non-payments. This approach will help tighten the overall cash operating cycle.
- Look after key accounts: It’s common for 20% of customers to account for 80% of outstanding debts. These key accounts and their associated debts require special attention to ensure timely payments.
- Issue Credit Notes Promptly: Address any adjustments or corrections in invoices by issuing credit notes without delay.
- Engage Directly with Decision-Makers: Personally deal with individuals responsible for approving invoices or signing checks. Avoid being misled too often by excuses like “the check’s in the mail.”
- Incentivize Sales Teams: Pay commissions to salespeople based on cash collected rather than sales made. This motivates them to ensure their clients fulfill payment obligations.
- Set and Monitor Targets: Establish clear targets for receivables days or the percentage of overdue accounts. Regularly report actual performance against these targets and review outcomes. Additionally, consider setting incentives and bonuses for credit managers to encourage better results.
Conclusion
An Accounts Receivable dashboard in Power BI empowers businesses to turn raw financial data into actionable insights. By visualizing critical metrics like overdue invoices, aging buckets, and payment trends, companies can improve liquidity, reduce risks, and maintain financial health. Whether you’re a finance leader, a manager, or part of the sales team, this tool is indispensable for fostering accountability and enhancing your business’s cash flow..
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