10.10.2025 | Posted by Erik
Why Companies Struggle with Accounts Receivable (And What Actually Works)
Most companies think they’re handling their accounts receivable effectively, but the reality tells a different story. We’ve seen countless businesses with aging reports full of invoices from 2022, or even 2018, wondering why their cash flow is suffering. But what most companies think constitutes AR management barely scratches the surface of what’s actually needed.
Here’s what we’ve learned as an outsource receivables management firm with 40-plus years in the industry.
The Common (But Broken) AR Scenario
Most businesses follow this familiar pattern:
- Assign AR as a “side job” to current staff (usually sales or admin)
- Print an aging report and tell someone to “start making calls”
- Hope for the best without establishing clear processes
- Assume anyone can do it because “someone just needs to make the calls”
But the reality is, if AR isn’t someone’s primary responsibility, it becomes their last priority. We’ve seen this countless times: companies assign receivables management to their sales team, customer service reps, or administrative staff who already have full plates.
The problem? Nobody wants to do the “dirty work” of chasing invoice payments. Sales reps won’t risk relationships by asking for money during their next call. Customer service representatives can’t switch from solving problems to demanding payment.
When AR becomes everyone’s side job, it becomes nobody’s job.
What Actually Works: AR Best Practices from Successful Companies
1 – Establish Clear Processes and Ownership
Companies that excel at AR management have:
- Dedicated AR personnel whose primary job is invoice follow-ups
- Documented processes for when and how often to contact customers
- Clear escalation procedures from initial contact to collections
- Systematic documentation to track all customer interactions
2 – Get the Basics Right First
Before you can effectively collect, you need solid fundamentals:
- Send invoices immediately upon completion of work
- Provide invoice copies when customers claim they never received them
- Bill to the right person at the customer’s company
- Use aging reports as leverage for new orders (stop shipping to past-due customers)
3 – Implement a Step-by-Step Invoice Follow-up Process
Successful companies know exactly what happens at each stage:
- Initial follow-up when invoices become past due
- Escalation timeline for persistent non-payment
- Account holds for customers who continue ordering while past due
- Demand letters for seriously delinquent accounts
- Collections placement or write-offs for uncollectable debts
The Phone Still Works (Especially for Mid-Sized Companies)
While Fortune 500 companies typically require electronic communication, mid-sized businesses still answer their phones. Many accounts payable departments are simply overwhelmed. They have the money but are behind on data entry. A friendly phone call can often expedite payment.
When to Consider Accounts Receivable Outsourcing
If your team lacks the time, expertise, or emotional distance needed for effective AR, accounts receivable outsourcing might be the solution. Companies that outsource receivables management typically see improvements because:
- Dedicated professionals handle AR as their primary job
- Established processes ensure consistent follow-up
- Professional relationship management allows outsourced teams to act as an extension of your company, maintaining customer relationships while firmly but gently enforcing AR policies
Effective AR management requires dedicated attention, documented processes, and often the emotional distance that comes with outsourcing receivables management to specialists.