06.18.2025 | Posted by Erik

Stop Freaking Out About Tariffs! Focus on Your AR Instead

The news cycle has been relentless lately. Every day brings another headline about tariffs, trade policies, and economic uncertainty. We get it. As a business leader, you’re wondering how these changes might impact your bottom line. But while everyone else is spinning their wheels worrying about what might happen, the best move is to focus on what you can actually control.

Now, let’s be clear—we’re not dismissing the real challenges many businesses face with tariff changes. We have clients in manufacturing and import-heavy industries who tell us about meetings where sudden policy shifts literally change their cost structure before they’ve even left the conference room. That kind of immediate impact is genuinely stressful and requires quick pivots.

But here’s the key difference: while tariffs can hit your costs instantly, their impact on accounts receivable tends to be slower and more gradual. This gives you time to prepare and respond strategically.

The good news is, there are many things about your AR that you can control which can positively impact your cash flow. Here’s our take.

Don’t Get Caught in the News Cycle Trap

We’re living in an era of decision fatigue. Between tariff announcements, policy reversals, and daily economic speculation, it’s easy to feel like you need to make constant adjustments to your business strategy. But here’s our advice: take a step back and look at your actual metrics. Ask yourself these questions:

• Are your key performance indicators still looking good?
• Is your cash flow healthy?
• Are your customers still paying on time?

If you answered yes, then most of what you’re hearing is just noise. Of course, it’s important to stay informed, but don’t let the constant chatter distract you from running your business effectively.

The overriding theme here is simple: focus on your metrics, not the headlines. When the time comes to make real adjustments—if it comes—you’ll be in a much better position to make those decisions based on actual data rather than mere speculation.

How Tariffs Actually Impact Your AR (And What You Can Do About It)

Let’s talk about the two main ways economic uncertainty affects your accounts receivable: increased costs and unpredictability.

1. Increased Prices Mean Tighter Cash Flow

When tariffs drive up costs, those increases get passed along the supply chain: either to suppliers or end buyers. This inevitably squeezes margins, which directly impacts cash flow. Guess who usually gets pushed to the bottom of the payment pile when money gets tight? That’s right—your B2B invoices.

While companies will prioritize rent, utilities, and other immediate operational needs, supplier payments often get delayed. This is exactly why having robust accounts receivable management services in place becomes even more critical during uncertain times.

2. Unpredictability Leads to Payment Delays

We’re seeing something interesting in the current environment: the stress and uncertainty are causing businesses to delay decisions. It’s human nature, really: when things feel chaotic, people tend to hold onto their cash and wait to see how things shake out.

This “wait and see” mentality, when taken to the extreme, can lead to cash hoarding, leaving suppliers and vendors waiting longer for payment. From what we’re seeing in our own numbers, Q1 was a bit slower than usual, but nothing drastic. In other words, the metrics are still holding steady—and that’s what matters, for now. (Don’t worry, we’ll continue keeping a close eye on things).

Avoid These Common Pitfalls

When economic uncertainty hits, we see businesses make two critical mistakes that actually make their AR situation worse. If possible, avoid these scenarios:

1. Caving to Extended Payment Terms

You may start hearing requests like, “Hey, because of the tariff situation, I need to extend my payment terms from Net 30 to Net 90.” While this might seem like a sympathetic and reasonable option, it significantly increases your risk.

Let’s look at the math: if you extend terms by 60 more days and the economy takes a downturn 90 days from now, you’re stuck with higher outstanding balances and potentially uncollectible debt. The money that companies have today will be similar in 30 days, but 90 days is long enough for everything to change.

Our recommendation? Negotiate the shortest payment terms reasonable for your industry and customer base. It’s much easier to predict the next 30 days than the next 90.

2. Taking Your Eye Off the AR Ball

When stress levels rise, businesses often start shifting resources around. Maybe you’re thinking about layoffs, or you need your AR person to wear multiple hats. But here’s the problem: AR follow-ups are usually the first to get overlooked when people are stretched thin.

This is exactly when you need your AR strategy to be strongest. Your AR team is your frontline defense: they’re the first to know when customers are struggling, when key personnel leave, or when payment patterns change. Don’t lose that critical insight by misdirecting your efforts. If you don’t have a dedicated AR staff member, it’s a good time to consider accounts receivable outsourcing for specialized support in this area.

Smart Accounts Receivable Management Services Strategies for Uncertain Times

Instead of panicking, focus on what actually works. Over the past 40-plus years in accounts receivable management services, we’ve seen these fundamentals serve businesses well through every economic cycle:

• Reduce Your Days Sales Outstanding (DSO): Look for ways to get paid faster. Consider offering early payment discounts—something like 2% if paid within 10 days. For customers currently on Net 90 terms, now is a good time to negotiate back to Net 60 or Net 30.
• Tighten Credit Management: Consider reducing credit lines for high-exposure customers. If you’re nervous about a $10,000 credit line, reduce it to $5,000. Or better yet, negotiate shorter payment terms while keeping the same credit limit; this gives you the same effective exposure with faster cash flow.
• Put Accounts on Hold Sooner: Instead of waiting 30 days past due to put accounts on hold, consider 10 or 15 days. This does two things: it reduces your potential exposure if things go south, and it gives you leverage. When customers have orders ready to ship, they’ll be much more motivated to clear past-due balances.
• Increase Past-Due Follow-ups: This isn’t the time to reduce AR staffing. Make sure your AR employees are focused solely on invoice follow-ups, not juggling customer service or other tasks. Increased phone calls, email follow-ups, and attention to past-due accounts is exactly what is needed.
• Refresh Your Credit Investigations: Pull new credit reports on customers with high exposures. If certain customers make up a significant portion of your AR balance, perform fresh credit investigations to make sure they’re still solid. If any red flags are raised, consider what steps to take to minimize risk.
• Stick to What Has Worked Before: This might be the most important point: what has worked for your business in the past will likely work in the short term going forward. Don’t chase shiny new strategies or make dramatic changes based on what you’re hearing in the news. Look at your metrics and stick to proven fundamentals.

Focus on What You Can Control

We’re not saying there’s nothing to worry about. Economic uncertainty is a real concern. But spending time worrying about things you can’t control while neglecting the things you can control can foster more problems instead of solving them.

Accounts receivable management services are one of the most important tools you have for maintaining healthy cash flow during uncertain times. Whether you handle AR in-house or work with accounts receivable outsourcing partners, make sure you’re not taking your eye off this critical function.

If your metrics start changing—if you see DSO increasing, past-due amounts growing, or collection rates dropping—then it’s time to act. Just don’t wait until your aging reports look terrible. The longer you let problems fester, the harder they become to fix.

When to Consider Professional Accounts Receivable Outsourcing

If you don’t have adequate AR coverage in house, you lack a solid credit investigation process, or your current DSO isn’t where it needs to be, there are solutions available. Professional accounts receivable outsourcing by firms like Axim can provide the expertise and dedicated AR focus your business needs, especially during volatile times.

The key is to stay focused on your business fundamentals, trust your metrics over the news cycle, and make sure your AR processes are strong enough to weather whatever economic conditions come your way. Don’t let the noise distract you from what really matters: getting paid for the value you deliver.

Ready to discuss your accounts receivable strategy? Let’s chat.