Transforming Accounts Receivable Into Cash

In another post, we talked about the dangerous volume of accounts receivable being carried by many companies, as well as the importance of setting up business terms that not only make sense for you and your customers, but also ensure that you stay in business long enough to accomplish your missions and make an impact. We covered seven steps, which you can read about here.

The point is, when everyone involved understands why the terms are what they are (and the relative benefits to both sides for being accountable), nothing is easier or will provide you with a better night’s sleep than beginning every new business relationship with a complete understanding of what is to be expected on each side.

Okay, so that’s simple enough with new business. But what about those accounts that have been around forever and who have over time, shall we say, taken advantage of some loose expectations or collection efforts on your side? Many businesses have payment terms on their invoices which are no more than wasted ink, as customers stretch their own cash flow by passing the burden down the line.

Thankfully, while it requires diligence, correcting this situation is not as difficult as it may seem, and doing so will bring your business relationships closer together in the process. 

Depending on the circumstances and the personalities involved, each customer may require a specific game plan. Here is one example of what may be done to turn those accounts receivable into cash:

First, review your current accounts tomorrow, and resolve to clean up any and all messes within six months. More often than not this will require several steps; the relationship didn’t get loose over night, and it won’t be fixed in a day.

Second, draft a plan to meet with each current customer at a VP level or above to do a relationship check. This may or may not be something you want to delegate; consider going yourself… and take one of your team with you.

Prior to your meeting, e-mail an agenda that contains a performance review of the relationship, and your service. Allow the Veep to address every possible aspect from their point of view. Prod them to be brutally honest if necessary, and do not be defensive. What are they thrilled about? What needs improvement? What could a competitor offer that would take their business away? You need to know this because your competitors are working on doing that this very minute.

Third, use the insights you received in the previous step and fix anything that needs to be fixed. You cannot ask them to make significant changes to their established Accounts Payable routines if there are unresolved issues. Look at ways to innovate, improve and streamline processes to better listen to their needs, and to significantly separate yourself from your closest competition. By the way, this is a leadership moment here; your team needs to see you passionate about nailing specific customer demands.

Finally, go to point number 3 of the original post, and retrieve the powerful win-win incentive that you created. Prepare a few testimonials from ultra-satisfied customers regarding the incentives, and the level of success they are achieving with you.

Then call your VP friend and have this conversation: “Joe, this is Steve Buelow; I have two things I’d like to run past you. First, I need to get your feedback on the improvements we’ve made over the last couple of months… I think we may have nailed everything, but I need to hear from you. Second, we’re looking at a few new options on our business terms, and if it makes sense, there may be a significant financial incentive in it for you… what’s your schedule look like?”

Doing the work necessary to repair relationships and correct payment issues will significantly improve your ability to fund your visions, and take advantage of growth opportunities in your market. It will also gain you additional respect from your customers… and your banker!



1) Business terms should guarantee sufficient cash flow to impact your market, and achieve your organizational visions and purposes.

2) Combining large Accounts Receivable balances with a tight economy can keep you up at night.

3) Old habits are still hard to break.


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