Which of the following is a key performance indicator (KPI) for accounts receivable?

Days Sales Outstanding (DSO) is a crucial key performance indicator (KPI) for accounts receivable as it measures the average number of days that it takes a company to collect payment after a sale has been made. A lower DSO indicates that a company is efficient in its collection processes and is able to convert its sales into cash quickly, which is vital for maintaining healthy cash flow and financial stability.

Monitoring DSO allows businesses to assess how well they are managing their accounts receivable and can help identify potential issues in the collection process. For instance, if DSO is increasing over time, it may signal that customers are taking longer to pay, which can prompt further analysis into customer payment behaviors or credit policies.

While total sales revenue, employee productivity rate, and product return rate are significant metrics for a business's overall performance, they do not directly measure the efficiency and effectiveness of the accounts receivable process. Total sales revenue looks at overall sales rather than how promptly those sales are collected. Employee productivity rate pertains to workforce efficiency but doesn't reflect financial aspects. Product return rate focuses on customer satisfaction and product quality rather than the cash flow cycle. Thus, DSO specifically targets how well accounts receivable is functioning.