Percent of Total Receivables Over 90 Days

KPI Categories

This KPI is associated with the following categories and industries in our KPI database:

Percent of Total Receivables Over 90 Days Interpretation

High values of this KPI indicate potential cash flow problems and inefficient collections processes. Conversely, low values suggest effective credit management and timely customer payments. Ideal targets typically fall below 10% of total receivables.

<5% – Strong performance; indicates effective collections
6–10% – Acceptable; monitor for potential issues
>10% – Concerning; requires immediate attention and analysis

Common Pitfalls

Many organizations overlook the importance of timely collections, which can distort this metric.

Failing to segment customers based on creditworthiness can lead to increased risk. Treating all customers equally may result in higher delinquency rates among riskier accounts.
Neglecting to follow up on overdue invoices can exacerbate cash flow issues. Delayed reminders often lead to longer collection cycles, impacting overall financial ratios.
Inconsistent invoicing practices can confuse customers and delay payments. Ambiguous terms or formats may lead to disputes, further extending receivables aging.
Ignoring external economic factors can skew expectations. Market downturns or industry-specific challenges may increase overdue receivables unexpectedly.

Improvement Levers

Enhancing the collection process can significantly reduce the percentage of receivables over 90 days.

Implement automated reminders for overdue invoices to prompt timely payments. Regular communication can reduce the likelihood of accounts slipping into delinquency.
Establish clear credit policies that align with customer risk profiles. Tailoring terms based on payment history can mitigate potential losses.
Utilize data analytics to identify trends in overdue accounts. Analyzing payment patterns can inform proactive measures to address potential issues.
Train staff on effective collection techniques to improve customer interactions. Empowering teams with negotiation skills can enhance recovery rates.

Percent of Total Receivables Over 90 Days Case Study Example

A mid-sized technology firm faced a troubling rise in its Percent of Total Receivables Over 90 Days, reaching 15%. This situation tied up significant cash, hindering their ability to invest in new product development. To address this, the CFO initiated a comprehensive review of the collections process, identifying inefficiencies in customer follow-ups and invoice clarity.

The firm implemented a new customer relationship management (CRM) system that automated reminders and tracked payment history. Additionally, they restructured their credit policies to better reflect customer risk profiles. This included tightening terms for high-risk clients while offering incentives for early payments to reliable customers.

Within 6 months, the percentage of receivables over 90 days dropped to 7%. The company regained access to previously tied-up cash, allowing for strategic investments in innovation. Improved cash flow also enhanced their ability to negotiate better terms with suppliers, further strengthening their financial position.

Every successful executive knows you can't improve what you don't measure.

With 20,780 KPIs, PPT Depot is the most comprehensive KPI database available. We empower you to measure, manage, and optimize every function, process, and team across your organization.

Subscribe Today at $199 Annually

KPI Depot (formerly the Flevy KPI Library) is a comprehensive, fully searchable database of over 20,000+ Key Performance Indicators. Each KPI is documented with 12 practical attributes that take you from definition to real-world application (definition, business insights, measurement approach, formula, trend analysis, diagnostics, tips, visualization ideas, risk warnings, tools & tech, integration points, and change impact).

KPI categories span every major corporate function and more than 100+ industries, giving executives, analysts, and consultants an instant, plug-and-play reference for building scorecards, dashboards, and data-driven strategies.

Our team is constantly expanding our KPI database.

Got a question? Email us at support@kpidepot.com.

FAQs

What does a high percentage of receivables over 90 days indicate?

A high percentage often signals cash flow challenges and inefficiencies in collections. It may also suggest that customers are facing financial difficulties or that credit policies need reevaluation.

How can this KPI impact overall financial health?

This KPI directly affects liquidity and working capital. A high percentage can restrict a company's ability to invest in growth opportunities or meet short-term obligations.

What strategies can reduce this percentage?

Implementing automated reminders and refining credit policies are effective strategies. Regular analysis of customer payment patterns can also inform proactive measures.

How frequently should this KPI be monitored?

Monthly monitoring is advisable for most organizations. However, companies experiencing rapid growth may benefit from weekly reviews to quickly address emerging issues.

Is there a standard target for this KPI?

While targets can vary by industry, maintaining a percentage below 10% is generally considered healthy. Organizations should benchmark against peers for more specific goals.

Can external factors influence this KPI?

Yes, economic downturns or industry-specific challenges can increase overdue receivables. Companies must remain vigilant and adjust strategies accordingly.