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