For years, organizations have treated accounts receivable (AR) as a back-office necessity. It was something to manage, not optimize. But for CFOs at billion-dollar B2B companies, outdated AR approaches are becoming a strategic liability, trapping capital and limiting growth when agility matters most.

“For billion-dollar enterprises, it's common to see hundreds of millions locked up in receivables,” explains Harlan Boyles, Senior Business Director at Capital One Trade Credit. “This often represents 15 to 25% of their balance sheet assets and is capital that could otherwise fund growth, acquisitions or share buybacks, but is instead sitting idle awaiting collection.”

To transform AR from a cost center into a strategic advantage, companies need a modern, integrated AR program that unlocks trapped capital, streamlines workflows and supports growth.

Why legacy AR systems can't support modern growth

Trapped working capital can hinder growth and increase borrowing needs, burdening companies with higher interest expenses and weaker balance sheet ratios. In turn, the C-suite faces pressure from investors, shareholders and credit rating agencies to improve their working capital efficiency.

Legacy AR systems strain internal teams too. Manual processes ranging from credit applications and decisioning to billing and collections hinder the efficiency of the order-to-cash cycle, tying up both human resources and working capital. “Manual processes impact multiple teams across the organization, as they struggle to manage the complexity of B2B buyer-specific terms and invoicing,” says Boyles.

Manual collections also leave outstanding payments open longer, negatively impacting sales by tying up customer credit lines and limiting their buying potential. “Sales teams suffer as they spend more time tracking invoices instead of closing new deals, delaying revenue generation and damaging customer relationships,” says Boyles.

These challenges all stem from fragmented, homegrown AR systems or point solutions that don’t integrate easily with other systems across the full order-to-cash lifecycle. These systems frequently buckle at scale and can’t adapt when customer expectations shift or payment preferences multiply. This causes headaches for finance teams, who lack a clear view of the entire AR process.

4 benefits of modern AR programs

Modern AR programs that integrate seamlessly and offer upfront funding provide companies with a strategic advantage by minimizing manual processes and freeing capital to fund growth, delivering four distinct advantages that CFOs value:

1. Improved liquidity

“By moving to a partner-provided integrated AR solution, companies can get funded upfront on their sales within 24 to 48 hours, instead of months later," explains Boyles.

This lowers days sales outstanding (DSO) and gets working capital flowing quickly, while streamlining the customer experience from purchase to payment and offloading complex credit, billing, payment and collections processes to the AR partner.

2. Balance sheet efficiency

By freeing up working capital that would otherwise be tied up in receivables, companies have more cash on hand to self-fund their growth and reduce their reliance on external debt to fund strategic initiatives. This strengthens the balance sheet, improving financial flexibility and optics.

3. Improved credit strength

Predictable cash flow and lower leverage ratios can positively impact credit ratings, the cost of capital and valuation multiples.

4. Enhanced investor confidence

Enhanced liquidity, balance sheet efficiency and credit rating bolster investor confidence.

“Modern AR programs with upfront funding transform receivables from an operational burden into a source of liquidity and competitive advantage,” says Boyles. It also enables teams to shift from manual credit, billing and collections processes to higher-value tasks, such as building customer relationships.

Unlocking capital with Capital One Trade Credit

The foundation for transforming AR into a strategic asset lies in adopting an end-to-end platform that unifies fragmented systems, streamlines workflows and drives efficiencies — a solution Capital One Trade Credit delivers.

The platform integrates seamlessly via secure APIs with existing ERPs, reducing the strain on limited technology resources and teams.

It can also be embedded into point-of-sale and ecommerce systems, enabling near-instant credit decisioning and omnichannel purchasing to meet customers wherever they are. "When a buyer applies for credit, the system instantly analyzes multiple data sources, including financials, behavioral data and payment history, to deliver an approval and credit limit within seconds,” Boyles explains.

Capital One Trade Credit also offers upfront funding, which improves cash flow and liquidity nearly overnight. Organizations can streamline and automate operations through our platform while maintaining control over customer relationships, meeting unique customer needs and winning sales simultaneously.

By offering flexible risk transfer options, the platform enables companies to reduce or remove non-payment and fraud liability from their balance sheet, ensuring they remain in control of sales while still managing risk effectively.

Proven results: How leading enterprises are transforming AR

These benefits come to life in real-world examples. Boyles recounts a multibillion-dollar retailer's transformation when using Capital One Trade Credit: “By integrating digital credit applications with automated credit decisioning into their sales systems and workflows, they were able to achieve a 95% increase in instant decisions. This enabled sales to have immediate insight into approvals or denials, as well as line sizes, so they could proceed confidently with selling. They also saw a 30% increase in the quality of sales wins.”

Another multi-billion-dollar B2B enterprise saw even more dramatic results:

• The company slashed DSO from 65 days to just two. Freeing up cash in this way enabled it to cut line of credit usage and interest expenses by up to 90%.
• It also used the extra working capital to expand inventory fivefold while reducing inventory costs by 3% by improving its negotiating terms.
• The increased inventory boosted franchise store sales by up to 141%.

Turning AR into a strategic asset

Modern AR programs provide benefits that go beyond operational efficiency. "Organizations can free up funds to support M&A, expand inventory, broaden product lines or reinvest in customer acquisition without raising new debt," Boyles says. “This turns AR into a competitive advantage, helping to win and retain customers by offering the flexible terms and billing they need while delivering the seamless purchase-to-payment experience they’ve come to expect.”

How to begin? "Calculate the working capital trapped in receivables and model the ROI of reinvesting the dollars freed by reducing DSO," Boyles advises. “Armed with those numbers, you'll likely find the business case for modernizing AR writes itself.”

Ready to reimagine AR as a strategic asset and unlock growth? Connect with the Capital One Trade Credit team at [email protected] to get started.