Percentage of total finance function FTEs allocated to the processes "process accounts receivable (AR)," "manage and process collections," and "manage and process adjustments/deductions"

This measure calculates the percentage of total finance function full-time equivalent employees that process payments due from customers, including all funds received, whether by check or electronically; coordinate and follow through on collecting payments due; and receive, rectify and monitor customer adjustments and deductions resulting from warranties, claims, returns, and recalls of products and/or services. The finance function refers to financial strategy and planning, investment management, profitability and cost management, revenue cycle, accounts payable and expense reimbursement, payroll, general accounting and reporting, fixed asset management, and internal audit. This measure is part of a set of Supplemental Information measures that help companies evaluate additional variables not covered elsewhere for the "process accounts receivable (AR)" process.

Benchmark Data

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Measure Category:
Supplemental Information
Measure Id:
102011
Total Sample Size:
1,028 All Companies
Performers:
25th
Median
75th

Compute this Measure

Units for this measure are percent.

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((Number of FTEs who perform the process "process accounts receivable (AR)" + Number of FTEs who perform the process "manage and process collections" + Number of FTEs who perform the process "manage and process adjustments/deductions") / Number of FTEs who perform the function "manage financial resources") * 100

Key Terms

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FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Supplemental Information

Supplemental information is data that APQC determines is relevant to decision support for a specific process, but does not fit into the other measure categories such as cost effectiveness, cycle time, or staff productivity.

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.