Credit Management:What is the KPA and KPI of a Credit Manager?

Published by slang March 28th, 2006 in Credit Management, Finance Role/KPA/KPI

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In my article on the Role of Finance, I have included a topic on Targeted Performance Management (TPM).

By setting targets to the credit personnel employee, this will directly enable the objectives of the company to be achieved. The employee himself/herself will have a better focus and knows exactly what Managements wants from him/her and others.

The below suggest at least those KPA and KPI which you should put up in the TPM Worksheet of the Credit manager:

KPA

KPI

Comments

Accounts Receivable Management

Ageing %
· To reduce the debts ageing % > 120-day from the current of 25% to 5% by the end of Qtr 4 ‘2006.DSO

·To achieve a DSO of 90-day as at the end of Qtr 4’2006

Aged analysis of Overdues:

To reduce from the current 30% to 10% by Qtr 3’2006

Overdues as a % of Total debtors,

To reduce from from the current 20% to 5% overdues as a % of total debtors

Disputed Debts (including Debit notes ) as a % of Total debtors

To reduce from from the current 20% to 5% disputed debts as a % of total debtors

Out Performance- < 3% of total amount
Exceeded Expectation– 3% - 5% of total amount
Met Expectation– 5% of total amount
Below Expectation– 5.01% - 20% of total amount
Inadequate Performance- > 20% of total amount
Out Performance - < 75 days
Exceeded Expectation – 75 days to 89.99 days
Met Expectation - 95 days
Below Expectation – 95.1 days to 115 days
Inadequate Performance - > 115 days

You can also include some of the KPA/KPI of the Order-To-Cash Cycle into the above table. (please refer to my article on KPA/KPI on Order-To-Cash Cycle)

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