Cash management and Accounts receivable


For most companies, Accounts Receivable (AR) is the biggest asset on their balance sheet. In fact, AR processes affect almost every process in your company, making it hard to overestimate the importance of effective AR management. Weak controls can lead to increased risks in many areas – including your bottom line. The simple fact is that all the hard work done in sales may be wasted if your AR process is inadequate.


A structured handling of your AR processes will benefit your organization in the following ways:

1. You will get paid faster and reduce bad debt write-offs.

Typically, companies write off about 1% of their annual revenue. You can imagine what it would mean to reduce this figure by even 10%. Statistics show that companies collect about 74% of invoices as old as three months, 30% of invoices as old as six months, and only 10% of invoices that are 12 months old or more. This is why a process that is strict – yet personalized – is very important to properly running your AR.

2. You will resolve invoice disputes faster and improve your communication.

Good visibility and a well-defined process allow you to improve communication with your customers and resolve any misunderstandings there may be concerning invoices. Clear communication both increases customer satisfaction and is a proven way to decrease your credit risk.

3. Your cash position will be improved and therefore financing costs are reduced.

4. Increased automation of payment reconciliation and a consistent reminder process increases efficiency.

What’s more, it is very important to have a tight, well-managed integration between all relevant systems, including invoice sending, bank connections, reminders and collections.

5. Administrative costs decrease when there is less manual work.
Automation decreases manual work in your AR process and makes relevant AR reporting available all the times. Another very important factor is the centralizing of the information and collection processes. It is only when this occurs that you have full visibility of your company’s financial health from an AR perspective.