Forward this blog to your CFO or Controller…and ask for a response to the following questions:

• What do we do to keep our accounts receivable current?
• Why aren’t our customers paying on time?
• What problem or problems do we have with our accounts receivable?
• What percentage of our accounts receivable is aged out beyond 30 days?
• Who does our accounts receivable management and how do they do it?
• Show me the reporting you use to manage our accounts receivable?

Saying what we all already know: the pathway to finding opportunities, process improvement, corrective actions, and/or better risk management starts with knowing which questions to ask. Use these questions to start a dialogue with your CFO or Controller and get opportunities, process improvement, corrective actions, and better risk management related to accounts receivable management on the table.

Cash is King. Accounts receivable management that isn’t optimized for success leaves cash behind…cash that could be used for funding operations, funding growth, and delivering profits to shareholders.

Here’s points to consider in your evaluation of the answers you get:

• What problem or problems do we have with our accounts receivable?

  • There’s potential for more than one point of failure within an accounts receivable management process or workflow. Deficiencies and inefficiencies might look like a flawed process for the timely and accurate delivery of invoices, or it could be an inefficient payment process (it’s a hassle for your customers to pay), or maybe there’s no one dedicated to the job of calling customers on past due accounts receivable. Best to ask the question as an open information question and gain insight into anything and everything that might not be working.
• What percentage of our accounts receivable is aged out beyond 30 days?
  • Lagging accounts receivable puts funding operations, funding growth, and delivering profits to shareholders at risk. The percentage of accounts receivable aged out beyond 30 days correlates to the degree of risk.

• Why aren’t our customers paying on time?

  • It’s important to know that in addition to accounts receivable management problems (see the first bullet), issues like a bad sales process, bad origination processes, or delivery failure could be contributing factors to a lagging accounts receivable.
• Who does our accounts receivable management and how do they do it?
  • Effective accounts receivable management requires human resources and sound systems. Consistency, regularity, and prioritization are important attributes to consider when evaluating the response to this question.
• What do we do to keep our accounts receivable current?
  • In other words: who does what (and how do they do it) when customers don’t pay on time?
• Show me the reporting you use to manage our accounts receivable?
  • Look at an aging report and look for flash reporting to report out on the health of your accounts receivable.

Cash is King. Cashflow problems create a drag on successful operations and stunt growth opportunities. Shoring up your accounts receivable management lets you confidently get back to the business of managing and growing your business.

Start your conversation with your CFO or Controller today.

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