The core KPIs for marketplace finance teams are days to settle (delivery or dispatch to cash received), short-pay rate (the share of expected settlement that never arrives) and net realisation (cash received as a percentage of gross sales value). Define each once, measure by marketplace and month, and compare against your seller agreement rather than generic benchmarks.
Why these three KPIs matter
Sales dashboards show what customers paid. Finance teams need to know what actually reached the bank. Between the two sit commissions, fees, returns, tax collections, adjustments and timing gaps. These three KPIs make that gap measurable:
- Days to settle tells you about timing and working capital.
- Short-pay rate tells you about accuracy, meaning whether you were paid what the terms say you should be.
- Net realisation tells you about overall economics, meaning how much of every rupee of gross sales you keep as cash.
Track them per marketplace, per month, and where possible per category or brand. A blended number across marketplaces hides the problem.
Days to settle: definition and measurement
Definition: the number of calendar days between a defined start event and the date the settlement for that order reaches your bank account. Pick one start event, such as delivery date or dispatch date, and keep it constant. Your seller agreement or marketplace payment policy will state the settlement cycle and its trigger, so use that as your reference.
- Pull order-level delivery dates from the sales report.
- Match each order to its settlement line and bank credit date.
- Calculate days for each order, then report the median and the 90th percentile.
- Flag orders that are delivered but unsettled beyond the agreed cycle.
The average alone is misleading. A few very old unsettled orders can sit behind a healthy-looking average, so the tail matters as much as the middle. Also separate returns, which usually follow a different path, from completed sales.
Short-pay rate: finding money that never arrived
Definition: the value of expected settlement that was not paid, as a percentage of expected settlement.
Short-pay rate = (Expected settlement − Actual settlement) ÷ Expected settlement × 100
The hard part is the expected figure. It has to be built from your agreed commission, fee and tax terms, not from the marketplace's own statement. Otherwise you are only checking the marketplace against itself. Find the terms in your seller agreement, rate card or latest commercial communication, and confirm they are current, since marketplaces revise them.
Also track the short-pay rate by cause: commission above agreed rate, wrong fee slab, unexplained deductions, returns deducted without a valid return, or missing payouts. Cause-level data shows which recovery case to raise first. A count-based version (orders short-paid ÷ orders settled) is a useful companion because it shows how widespread the issue is.
Net realisation: what you keep per rupee of sale
Definition: net cash received for a period as a percentage of gross sales value shipped in that period.
Net realisation = Net settlement received ÷ Gross sales value × 100
Gross sales value should be the same base every month, for example the invoice value of shipped orders. Net settlement is what remains after returns, commissions, fees, shipping charges, adjustments and any taxes collected or deducted at source by the marketplace. How GST, TCS and TDS should be treated in your books is a matter for your tax adviser and the latest rules, so decide the treatment once and apply it consistently.
Compare actual net realisation to expected net realisation computed from your terms. The gap between the two is largely your short-pay and leakage story, expressed in percentage points.
Supporting metrics and review cadence
Three KPIs are the headline, but a few supporting metrics explain movements in them:
- Return rate by marketplace and category, since returns drive most realisation swings.
- Unreconciled balance: sales or settlement value not yet matched.
- Recovery case ageing: open claims by age and value, and value recovered versus raised.
Review weekly for unsettled orders and open cases, and monthly for the three headline KPIs. Tools such as MarketplaceMetrics by Fundle can automate the matching of sales to settlements and the checks against agreed terms, but the KPI definitions above work equally well in a well-built spreadsheet.
Common mistakes when setting these KPIs
- Changing the start event for days to settle between months, which makes trends meaningless.
- Using the marketplace statement as the expected figure, which hides over-charging.
- Blending marketplaces, so a slow channel is masked by a fast one.
- Borrowing external benchmarks. Set targets from your own agreement and history instead.
- Ignoring timing: judging short-pay before the settlement cycle has elapsed overstates the problem.
Worked example
Illustrative example (all figures are illustrative, not real results or rates): a brand ships orders worth ₹10,00,000 on one marketplace in a month. Based on its agreed terms, expected settlement after returns, commission and fees is ₹6,80,000. Actual settlement received is ₹6,52,000.
| Metric | Calculation | Result |
|---|---|---|
| Short-pay amount | ₹6,80,000 − ₹6,52,000 | ₹28,000 |
| Short-pay rate | ₹28,000 ÷ ₹6,80,000 | about 4.1% |
| Actual net realisation | ₹6,52,000 ÷ ₹10,00,000 | 65.2% |
| Expected net realisation | ₹6,80,000 ÷ ₹10,00,000 | 68.0% |
| Days to settle (median) | Delivery to bank credit | 9 days, against an agreed cycle you confirm from your contract |
The 2.8-point gap between expected and actual realisation equals the ₹28,000 to investigate. Splitting it by cause shows which part is a genuine return adjustment and which is a claim worth raising.
Questions and answers
What is a good days-to-settle figure for a marketplace?
There is no universal number. Compare your actual days to settle with the payment cycle in your seller agreement or the marketplace's current payment policy. Track the median and the 90th percentile, and investigate any orders that run beyond the agreed cycle.
How is short-pay rate different from return rate?
Return rate measures products sent back by customers. Short-pay rate measures money you were owed under agreed terms but did not receive. Returns can legitimately reduce settlement, so build them into the expected figure before calculating short-pay.
Should net realisation include GST and TCS?
Decide a consistent treatment and apply it every month. Whether tax amounts are inside or outside gross sales value and net settlement depends on your accounting policy and current rules, so confirm the approach with your tax adviser.
How often should we review these KPIs?
Review unsettled orders and open recovery cases weekly, and the three headline KPIs monthly by marketplace. Monthly review lines up with closing and gives enough settlement data to judge short-pay properly, while weekly checks stop old claims ageing unnoticed.