Why is it important to stay on top of accounts receivable?
Delays in collecting your accounts receivable can add up to big trouble. The negative impact on cash flow and the bottom line can reverberate to lost value for stockholders and other serious problems that can be avoided by taking action when an accounts receivable ages past its due date.
According to the Commercial Law League of America’s Commercial Collection Agency Section (CCAS) and the U.S. Department of Commerce, recent trends to ease payment requirements for commercial customers has seriously restricted cash flow and negatively impacted the bottom line for many companies.
A survey of CCAS members revealed that the likelihood of collecting in full on a past-due account drops significantly with the length of delinquency. For example, if an account is not collected before 90 days, it is likely that you will only collect 90 cents on each delinquent dollar. After six months, you can expect to recover only 67 cents of every dollar. And, after one year, it is expected that only 46 cents of every delinquent dollar will ever be collected.