Accounts receivable (AR) represents money owed to a company by customers for goods or services already delivered but not yet paid for. Managing AR efficiently is critical for cash flow — slow-paying customers create working capital pressure.
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Pro Tip
Offer a 2/10 net 30 terms: 2% discount if paid within 10 days, full amount due in 30. Many customers will pay early for even a small discount, dramatically improving your DSO.
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Did You Know?
Invoice factoring — selling AR at a discount to a third party for immediate cash — is a multi-trillion-dollar industry. Many small businesses use it to bridge payment gaps.
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