Overdue AR as % of Total AR
Proportion of accounts receivable that are past their due date
What is Overdue AR as % of Total AR?
Overdue accounts receivable (AR) as a percentage of total AR is the share of money owed to a business that is past its due date. It shows how much of customer balances is late.
A rising share signals collection problems and rising risk of bad debt.
How this KPI is measured
- Function
- Finance
- Sub-function
- Accounts Receivable
- Industry
- All Industries
- Type
- Lagging
- Impact
- Risk
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Overdue receivables / Total receivables) × 100
How to calculate it
Divide overdue receivables by total receivables, and multiply by 100.
For example, if 2,000,000 of 8,000,000 in receivables is overdue, the share is 25%.
Break overdue amounts into age bands, such as 1 to 30 days and over 90 days, since older debts are harder to collect.
Where it is used
Managing credit risk
Watch late balances.
Directing collection effort
Focus on the worst.
Forecasting cash
Estimate receipts.
How to improve it
Tips and common mistakes
- Age bands show the real risk.
- Look at a few large late accounts separately.
- Disputes can cause late payment. Resolve them fast.
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