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 |
|
| 1 | 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:
Overdues as a % of Total debtors,
Disputed Debts (including Debit notes ) 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)
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four, Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.
Also author to another very popular free educational accounting cum finance blog: http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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