Businesses are under pressure to deliver results faster and more efficiently than ever, especially in the age of AI, when automation and reducing manual work are front and center. Accounts receivable teams are not exempt from this pressure, in fact, AR teams are being asked more than ever to report on the financial health and stability of the business.
iSolutions surveyed accounting and finance professionals and found that the top priorities for AR teams include lowering processing costs, reducing overdue accounts, and increasing automation. While those goals are achievable, teams first need a clear way to measure their current performance and track whether changes are producing meaningful results.
Days Sales Outstanding
Days Sales Outstanding (DSO), measures the average number of days it takes an organization to collect payment after the sale. This is the most important indicator of collection performance and cash-flow health.
DSO Formula:
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days
Companies strive to achieve a low DSO number, meaning customers are paying quickly. When DSO is high, or increasing in time, it can indicate collections problems such as:
- Absent or slow follow up
- Difficult payment process for customers
- Inaccurate invoices
The State of Accounts Receivable report from iSolutions found that the most common average time to payment was between 21 and 30 days.
While that average was found in the survey, the right number depends on the organization type and industry. Factors such as payment terms, sales complexity, and time to delivery should all be taken into account. To determine your specific KPI around DSO, evaluate the metric on a monthly basis.
Percentage of Receivables Overdue
This KPI shows how much of the total accounts receivable balance is past due.
Formula:
Overdue Receivables Percentage = (Past-Due Receivables ÷ Total Receivables) × 100
Because reducing overdue accounts was one of the top priorities identified in the iSolutions survey, every AR team should understand both the total amount overdue and the percentage of customer base represented.
The overall percentage is useful, but aging categories provide more context. Teams should monitor balances that are:
- 1–30 days overdue
- 31–60 days overdue
- 61–90 days overdue
- More than 90 days overdue
A growing balance in the older categories is especially concerning because the likelihood of collecting an invoice generally declines as it ages. Reviewing overdue balances by customer, collector, business unit, and invoice value can help teams prioritize accounts at the most risk of not paying.
Collections Management is included in iPayments and includes automated functionality to collect on past due invoices more efficiently.
Cash Application Time
Cash application time measures how long it takes to apply an incoming payment to the correct customer and invoice.
This process may happen quickly when payments are automatically connected to invoice information. It can take hours or days when employees are manually applying payments.
The iSolutions study found that too many manual tasks were the most frequently reported AR challenge, selected by 49.59% of respondents. Participants also reported spending 30% to 50% of their workday on manual processes, potentially adding up to more than 1,000 hours per employee each year.
Long cash application times can cause:
- Inaccurate customer balances
- Unnecessary collection reminders
- Duplicate payments
- Increased customer inquiries
- Delayed financial reporting
- More unapplied cash
Teams can measure the average time from receiving a payment to fully applying it in Dynamics 365 Business Central.
With a solution like iPayments, this process happens automatically with no manual effort required. This eliminates the need to track this KPI as the process is fully automated from payment through cash application.
Cost to Process a Payment
The cost to process payments should be evaluated annually. Lowering processing costs was the most commonly identified AR priority for 2026, selected by 59.38% of survey respondents. In order to reduce those costs, it’s important to understand fee structures, choose the right provider, and evaluate your rates when your sales volume grows.
Businesses are able to include a surcharge on credit card payments in order to cover the cost of the credit card fee.
- Evaluate your processing fees
Many payment options for Dynamics 365 Business Central include higher than standard credit card processing fees, or will consistently increase fees with little notice or communication. Many Business Central users frequently discover they can save thousands on processing fees by moving to iSolutions from their current payment provider.
- Understand how manual effort impacts the bottom line
Manual processes are often a hidden expense with a significant financial impact. Accepting, entering, and applying payments can consume hundreds, or even thousands,of staff hours each year. With the average U.S. accounts receivable employee earning $23.23 per hour, eliminating just five hours of manual work per week saves 260 hours and more than $6,000 annually. That time can then be redirected toward higher-priority activities.
Understanding the full cost of processing each payment gives organizations a baseline for evaluating automation investments.
Accuracy of Payment Reconciliation
The iSolutions survey found that 39.09% of respondents consider difficulty reconciling payments a key AR challenge. Measuring the accuracy of reconciliation will provide you insights into the current state of your AR function and any progress you have made.
If you are manually matching payments to accounts, you should track when those payments require a correction due to an error such as incorrect amount, payment method, or even posting date.
Teams can track:
- Percentage of payments posted correctly the first time
- Number of corrections or reversals
- Hours spent researching reconciliation issues
- Differences between gateway deposits, bank funding, and ERP records
- Number of customer complaints related to incorrect balances
Improving this KPI can reduce manual work. By implementing an AR automation solution for Dynamics 365 Business Central like iPayments, this is automated, removing any chance for error.
AR Data Accuracy and Confidence
Not every KPI is purely financial. Reliability and confidence in your data and processes are just as important. If team members or leaders don’t trust the information, they spend time verifying numbers instead of acting on them.
Most survey participants said they were either very or mostly confident in their AR data. However, “mostly confident” still means there likely are issues or concerns with manual posting, delayed reconciliation, or disconnected systems.
Leadership decisions involving cash forecasting, hiring, spending, and investment depend on reliable financial information. If teams cannot fully trust their AR data, those decisions are being made with unnecessary uncertainty.
Customer Self-Service Adoption
A customer portal is an excellent tool that provides self-service options for your customers to view their account information, pay open invoices, see shipping information, and view prior payments and orders. With any tool, it’s important to measure adoption to ensure your customers are aware of the service and able to use it as intended.
- Percentage of payments made through self-service
- Number of active portal users
- Percentage of invoices paid through a payment link
- Number of invoice and statement requests received by employees
- Payment completion rate
Nearly one-third of survey respondents identified a lack of customer self-service as a challenge, while 24.93% reported receiving too many requests for invoice copies or statements. The effects were even more significant for small teams: 48% reported challenges related to a lack of self-service, compared with 25% of larger teams.
Self-service adoption should not be viewed only as a customer experience metric. It can directly influence employee workload, processing costs, and the time it takes customers to pay.
Choosing the Right AR KPIs
The KPIs above are a starting point. Focus on the measures that best align with your organization’s priorities. Establish a baseline for your current AR performance, then use it to set realistic targets and identify where changes in processes or technology could help. Review results monthly to track progress, address issues, and adjust as your needs change.
From Measurement to Improvement
KPIs are valuable only when teams use them to determine what should happen next. If DSO is increasing, investigate whether invoices are reaching customers promptly and whether payment options are convenient. If cash application takes too long, identify which payment methods or customer accounts create the most exceptions. If employees are spending hours responding to invoice requests, evaluate whether customers have access to real-time self-service tools.
AR teams are being asked to reduce costs, collect payments faster, and provide better information without continually adding employees. Accurate measurement gives them the evidence needed to prioritize improvements and demonstrate their impact.
iPayments for Dynamics 365 Business Central Improves KPIs
Dynamics 365 Business Central users see drastic improvements in their AR KPIs and nearly immediate ROI thanks to automated payment acceptance, cash application, and collections follow-up. Embedded payment links and a real-time customer portal make it easier for customers to pay, while automatic posting reduces manual work and the risk of errors.
These improvements help teams reduce processing time, collect overdue balances, and maintain accurate account information. By comparing performance before and after implementation, organizations can measure the impact on staff hours, payment speed, and costs.
See how iPayments can help streamline your AR processes. Sign up for an upcoming webinar or reach out to our team to schedule a demo.
