Systems cost to perform the processes "process accounts receivable (AR)", "manage and process collections", and "manage and process adjustments/deductions" per $100,000 revenue
This measure calculates systems cost per $100,000 business entity revenue, to perform the processes "process accounts receivable (AR)", "manage and process collections", and "manage and process adjustments/deductions". Systems cost refers to a variety of expenses related to computer hardware/software, network and application maintenance, data storage, etc., and all fees paid to full-time, part-time, or temporary employees or independent contractors hired to perform these services. These should not include one-time costs for major new systems developments/replacements. 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.]. The Process "manage and process collections" includes [Posting entries to respective accounts, and preparing accounts for receivables. Manage the cash collected by the business from its debtors. Record it in the books of accounts to provide clear information about the availability of the cash.]. The Process "manage and process adjustments/deductions" includes [Creating and providing funds for necessary adjustments and deductions, including all expenses that were required for the business at certain point in time.]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the process group "Perform revenue accounting".
Benchmark Data
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Compute this Measure
Units for this measure are dollars.
(Systems cost to perform the process "process accounts receivable (AR)" + Systems cost to perform the process "manage and process collections" + Systems cost to perform the process "manage and process adjustments/deductions") / (Total business entity revenue * .00001)
Key Terms
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.
Systems Cost
Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.
Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.
Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.
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.