Want FREE Templates on Organization, Change, & Culture? Download our FREE compilation of 50+ slides. This is an exclusive promotion being run on LinkedIn.

We have categorized 7 documents as Accounts Receivable. All documents are displayed on this page.

Warren Buffet, an acclaimed business magnate, once famously said, "We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don't have the latter, the first two will kill you." In the same vein, when it comes to the matter of Accounts Receivable (AR) management, companies ought to prioritize integrity, energy, and intelligence.

Did you know?
The average daily rate of a McKinsey consultant is $6,625 (not including expenses). The average price of a Flevy document is $65.

Trusted by over 10,000+ Client Organizations
Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.
AT&T GE Cisco Intel IBM Coke Dell Toyota HP Nike Samsung Microsoft Astrazeneca JP Morgan KPMG Walgreens Walmart 3M Kaiser Oracle SAP Google E&Y Volvo Bosch Merck Fedex Shell Amgen Eli Lilly Roche AIG Abbott Amazon PwC T-Mobile Broadcom Bayer Pearson Titleist ConEd Pfizer NTT Data Schwab

Flevy Management Insights: Accounts Receivable

Warren Buffet, an acclaimed business magnate, once famously said, "We look for three things when we hire people. We look for intelligence, we look for initiative or energy, and we look for integrity. And if they don't have the latter, the first two will kill you." In the same vein, when it comes to the matter of Accounts Receivable (AR) management, companies ought to prioritize integrity, energy, and intelligence.

For effective implementation, take a look at these Accounts Receivable best practices:

The Importance of Accounts Receivable Management

As several McKinsey insights reveal, companies that manage their AR efficiently can significantly improve their cash flow, reduce debt, and strengthen their overall financial health. Despite this, many Fortune 500 companies fail to view AR management strategically and as such, miss the opportunity to effectively optimize it.

Best Practices in Accounts Receivable Management

The following are some of the best practices in AR Management:

  1. Robust Credit Policies: Instituting strict credit policies can minimize the risk of non-payment. The policies should be transparent, objective, and adaptive to changing economic conditions.
  2. Fast and Efficient Collection Process: Developing a well-defined collection process, including steps like prompt billing, regular follow-up, and leveraging digital transformation can speed up collections.
  3. Audit and Compliance: Regular audits ensure that the AR operations follow the set processes and guidelines. It upholds an organization’s financial integrity and keeps frauds and misappropriations at bay.

Explore related management topics: Digital Transformation Best Practices

Technology and Accounts Receivable Management

According to a Gartner report, investments in FinTech platforms help to automate and streamline the AR processes, resulting in a reduction of day sales outstanding (DSOs) by up to 20%. Implementing such digital solutions represents a strategic transformation that goes beyond basic process improvement. It represents a cultural shift towards Innovation in Financial Management.

Technology can play a significant role in improving AR management. Machine learning algorithms can analyze customer payment behavior, identify risky clients, and forecast potential defaulters. Automated invoicing systems can reduce human error, speed up the invoicing process, and ensure the enforcement of credit terms and conditions. Moreover, real-time data analytics can provide insightful AR reports, aiding executives in making informed decisions and improving Risk Management.

Explore related management topics: Process Improvement Risk Management Machine Learning Financial Management Data Analytics

AR Outsourcing

Another emerging trend in AR management is outsourcing. According to a report by Accenture, organizations can save up to 30% by outsourcing their AR function while also maintaining or improving their receivables turnover ratio.

However, outsourcing comes with its own set of challenges and risks. Companies must ensure due diligence and select a partner that aligns with their culture and values. It is imperative that Performance Management practices are in place and that the outsourced agency holds the same territorial knowledge and customer sensitivity as the company itself.

Explore related management topics: Performance Management Due Diligence

The Future of AR Management

The future of effective AR Management lies in the strategic utilization of human and technological resources. For successful implementation, a change management approach is necessary where regular training is provided to employees for transitioning to a digital platform. Inclusive leadership, a strategic planning approach, and a culture that promotes experimentation and encourages learning from failures are vital for any organization aspiring for Operational Excellence in AR Management.

To conclude, a well-executed AR strategy can both optimize cash flow and mitigate credit risk for a company. By adopting best practices, harnessing the power of technology, and possibly even exploring AR outsourcing, Fortune 500 leaders have the tools to drive their company's financial health and cultivate lasting competitive advantage.

Explore related management topics: Operational Excellence Change Management Strategic Planning Competitive Advantage Leadership

Accounts Receivable FAQs

Here are our top-ranked questions that relate to Accounts Receivable.

How can businesses effectively measure the performance and impact of their accounts receivable management strategies?
Optimize Accounts Receivable Management by tracking KPIs like DSO and leveraging Best Practices and Technology to improve Cash Flow and Financial Stability. [Read full explanation]
In what ways can companies integrate their accounts receivable processes with other financial systems to improve overall financial health?
Integrating AR processes with financial systems through Automation, enhanced Data Analytics, and improved Customer Relationships boosts Operational Excellence and financial decision-making. [Read full explanation]
How can organizations leverage artificial intelligence and machine learning to predict accounts receivable delinquencies more accurately?
Organizations improve Financial Operations and Cash Flow Management by using AI and ML for predictive analytics in Accounts Receivable, identifying delinquency risks and optimizing collections. [Read full explanation]
What impact will the increasing adoption of cryptocurrencies have on accounts receivable processes and policies?
The increasing adoption of cryptocurrencies will streamline Accounts Receivable processes, offering faster, cost-effective transactions and improved customer satisfaction, but requires strategic Risk Management and compliance with evolving regulations. [Read full explanation]

Related Case Studies

No case studies related to Accounts Receivable found.

Explore all Flevy Management Case Studies

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

    "As a young consulting firm, requests for input from clients vary and it's sometimes impossible to provide expert solutions across a broad spectrum of requirements. That was before I discovered Flevy.com.

    Through subscription to this invaluable site of a plethora of topics that are key and crucial to consulting, I "

    – Nishi Singh, Strategist and MD at NSP Consultants
    "My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me "

    – Bill Branson, Founder at Strategic Business Architects
    "FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The "

    – Roderick Cameron, Founding Partner at SGFE Ltd
    "[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it give me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."

    – Royston Knowles, Executive with 50+ Years of Board Level Experience
    "One of the great discoveries that I have made for my business is the Flevy library of training materials.

    As a Lean Transformation Expert, I am always making presentations to clients on a variety of topics: Training, Transformation, Total Productive Maintenance, Culture, Coaching, Tools, Leadership Behavior, etc. Flevy "

    – Ed Kemmerling, Senior Lean Transformation Expert at PMG
    "Flevy is now a part of my business routine. I visit Flevy at least 3 times each month.

    Flevy has become my preferred learning source, because what it provides is practical, current, and useful in this era where the business world is being rewritten.

    In today's environment where there are so "

    – Omar Hernán Montes Parra, CEO at Quantum SFE
    "I like your product. I'm frequently designing PowerPoint presentations for my company and your product has given me so many great ideas on the use of charts, layouts, tools, and frameworks. I really think the templates are a valuable asset to the job."

    – Roberto Fuentes Martinez, Senior Executive Director at Technology Transformation Advisory
    "I have used FlevyPro for several business applications. It is a great complement to working with expensive consultants. The quality and effectiveness of the tools are of the highest standards."

    – Moritz Bernhoerster, Global Sourcing Director at Fortune 500

Download our FREE Strategy & Transformation Framework Templates

Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more.