Financial KPIs for Contracts: The True Health Check of Your Deals

/ Productivity, Blog / By

Strategic Fleet Control: The tool to honor contracts, increase trust and optimize your operations.

A contract might look profitable on paper while hiding costs that erode your margin. These financial KPIs will help you:

  • Identify late (or non-) payers.
  • Uncover hidden costs in agreements.
  • Make data-driven decisions, not guesses.

Key KPIs and How to Measure Them:

  1. Days Past Due (DPO)
    • Formula: (Total overdue days / # of late invoices)
    • Manufacturing example:
      • Client A: Pays in 45 days (contract: 30) → DPO = +15
      • Client B: Pays in 25 days → DPO = -5
    • Recommended actions:
      • DPO >10: Early payment discount (2%)
      • DPO >30: Hold shipments until payment
  2. % of Invoices Paid On Time:
    • Interactive dashboard (mockup):
      • Green (>90%): VIP clients
      • Yellow (70-90%): Warning
      • Red (<70%): Urgent review
    • Case: Logistics company improved cash flow by $120K/year after segmenting clients by this KPI.
  3. Real Margin per Contract
    • Advanced formula:
      • Margin = (Revenue) – (Direct costs) – (Hidden costs*)
      • *Includes: Rework, overtime, penalty fees

Hidden Costs You Must Track:

  • Unplanned discounts (e.g., impulsive “promotions”).
  • Resources wasted on problematic clients (collections hours).
  • Penalties for non-compliance (late deliveries, stockouts).

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