Finding money — whether a couple of coins on the ground or a $20 bill in an old jacket — brings unexpected joy. For businesses, finding underutilized budgets or other available sources of cash could be the difference between survival and failure. While underutilized budgets might be rare, there is a source of capital that businesses tend to overlook: accounts receivable (AR).
Nearly every business offers the flexibility of providing its goods and services to customers on credit. Without efficient and creative AR, many businesses would go belly up. However, the AR and collections process is slow and arduous, with vast amounts of cash owed to a business often delayed and left unclaimed because of the manual nature of AR.
Businesses must take a closer look at how they run AR to boost business resilience. More money in the proverbial bank could mean a business taking small steps to invest in new technologies, conduct research and development (R&D) to improve its product offerings, or even postpone its next round of funding.
The Covid-19 crisis stranded many companies across industries with less liquidity, with businesses coming to the realization that an improved AR and collection process might have made a significant difference. A 2019 analysis by PYMNTS.com and Fundbox found that in the U.S. alone, $3 trillion was tied up in businesses’ outstanding accounts receivables.