A quality accounts receivable operation is constantly looking at how it is performing, using data to determine what is working, what isn’t working, and why. A deep analysis of A/R will unveil efficiencies that may not be obvious and allow your business to do more without adding resources.
There are different theories on what exactly accounts receivable should be considered on a balance sheet. Most consider it an asset and something that can be leveraged against. However, anyone that has spent hours chasing payments may view it as a liability filled with uncertainty.
On the surface, cash flow is one of the key performance indicators businesses should be most concerned about. However, cash flow only shows part of the picture. The cash conversion cycle is a powerful metric for determining overall business health, showing how quickly a company can convert goods and services into cash.