Four areas of focus for accelerating accounts receivable collections to help with short- and long-term liquidity management.
Accounts receivable is one of the harder levers to pull when working to improve liquidity, and for good reason—it can be easier to delay payment to a vendor, delay inventory purchases, or even liquidate inventory than to get an unwilling customer to pay. However, our experience shows that with the right tools and approach, A/R can provide a significant liquidity source in less time than might be expected.
Each business faces its own challenges in collecting revenue. While a SAAS vendor can shut off access immediately, a consumer goods supplier likely can’t recoup delivered product. These differences highlight that there is no one-size solution to A/R challenges. However, a few principles can inform effective use of people, processes and systems to deliver both short-term and sustainable impact to the revenue collection process.
Accounts Receivable Priorities
Every company has to collect revenue—and despite each company’s unique customer base, we believe four common steps help improve A/R. Our firm uses these priorities to action change on inflated accounts receivable balances, as well as reduce burden to personnel in engagements across our performance improvement and liquidity management services.
- Prioritize Customers
- Prevent Upstream Roadblocks
- Identify & Pull Levers
- Evaluate Human Capital
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