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How should credit be handled for export/international customers? How do deposits and prepayments reduce credit risk? How do you build or use a credit scoring model? What forms of security or risk mitigation can support extending credit? How do you manage credit risk for a concentrated customer base? How does credit control balance revenue growth with risk in practice? How do you set a credit policy's approval authority matrix?
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Accounts Payable & Receivable › Credit Control

What KPIs measure credit control effectiveness?

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Answer

Key metrics: DSO and best-possible DSO, bad-debt expense as a percentage of sales, percentage of overdue AR, average days overdue, credit limit utilization, disputes as a percentage of AR, and the collection effectiveness index (CEI). Together they show whether credit is extended prudently and cash is collected efficiently.
CEI = (Beginning AR + Credit Sales - Ending Total AR)
      / (Beginning AR + Credit Sales - Ending Current AR) x 100.
Real-world example A CEI near 100% and low bad-debt-to-sales confirm credit control is both extending credit well and collecting effectively.

Common follow-ups: What is the collection effectiveness index? | How do DSO and CEI complement each other?

Aging Analysis Collections & Bad Debts Credit Control
All 22 Credit Control questions