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)
- Performance Management/Measurements/KPI used in Credit Management/Credit Control
- KPA/KPI:Practical Challenges In Implementing Targeted Performance Management (TPM)
- Credit Management:An Overview,its Importance and Characteristic of a Company having a well run credit management department
- ALL TOPICS COVERED UNDER THE HEADING-CREDIT MANAGEMENT/CREDIT CONTROL
- Order-To-Cash Cycle:Definition,An Overview,Benefits,KPA and KPI
- KPA/KPI:Identifying Your “Customer”
- KPA/KPI:Illustration of Good KPI
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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