Overhead cost to perform the process "process accounts receivable (AR)" per $100,000 revenue

This measure calculates overhead cost to perform the process "process accounts receivable (AR)" per $100,000 business entity revenue. Overhead cost refers to expenses that an organization cannot identify as direct costs of performing a process. These include occupancy, facilities, utilities, and maintenance, etc. The Process "process accounts receivable (AR)" includes [Processing payments due from customers. This includes all processing of funds received, whether by check or electronically. This does not include the generation of invoices.]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process "Process accounts receivable (AR)".

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure Id:
105958
Total Sample Size:
605 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
No

Compute this Measure

Units for this measure are dollars.

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Overhead cost to perform the process "process accounts receivable (AR)" / (Total business entity revenue * .00001)

Key Terms

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Total Annual Revenue/Net Revenue

Total annual revenue is net proceeds generated from the sale of products or services. This should reflect the selling price less any allowances such as quantity, discounts, rebates and returns. If your business entity is a support unit and therefore does not directly generate revenue, then provide the revenue amount for the units you support. For government/non-profit organizations, please use your non-pass-through budget. For insurance companies the total annual revenue is the total amount of direct written premiums, excluding net investment income. Note: Business entity revenue needs to only include inter-company business segment revenue when the transactions between those business segments are intended to reflect an arm's length transfer price and would therefore meet the regulatory requirements for external revenue reporting.

Overhead Cost

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Measure Scope

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Cross Industry (7.2.1)

  • 9.2.3.1 - Establish AR policies (10799) - Creating rules and regulations to be followed in case of credit sales to customers. Create rules and procedures to follow at the time of sale (e.g., the allowable number of installments).
  • 9.2.3.2 - Receive/Deposit customer payments (10800) - Collecting cash from customers. Deposit it into bank account. Make entries into the books of accounts.
  • 9.2.3.3 - Apply cash remittances (10801) - Checking and moving funds between countries for business activities, typically through authorized remittance agents.
  • 9.2.3.4 - Prepare AR reports (10802) - Preparing reports that detail balances due or what to collect from customers at a certain point in time.
  • 9.2.3.5 - Post AR activity to the general ledger (10803) - Preparing the general ledger for account receivables from journals. Place all journal entries related to accounts receivables in the general ledger accounts of a business.