What if your biggest asset was actually your biggest drain? For many CFOs, that’s the reality of accounts receivable (AR). While AR is designed to bring in revenue, it can erode liquidity, frustrate customers and create costly inefficiencies when managed through outdated, legacy systems.
That’s why AR modernization is no longer optional. Forward-looking leaders use AR strategically to improve liquidity, elevate the customer experience and improve operational efficiencies that support business growth.
“Automation alone doesn’t solve AR challenges,” says Harlan Boyles, Senior Business Director at Capital One Trade Credit. “Modernization isn’t just about digitizing invoices — it’s about transforming how data flows between systems, customers and teams. The goal isn’t efficiency for finance alone; it’s building a more agile, customer-friendly and data-driven AR function.”
Strengthening the balance sheet
AR is often the most significant drain on working capital, with its impacts especially clear when key pressure points start to surface.
For example, chronic cash shortfalls despite strong sales indicate cash is trapped in receivables, while rising days sales outstanding (DSO) signals liquidity strain and a weak cash conversion cycle. These issues erode working capital, prevent reinvestment in growth and increase reliance on debt — ultimately limiting financial flexibility.
In fact, companies in the S&P 1500 reported holding roughly $707 billion of trapped liquidity in working capital — a 40% increase from pre-pandemic levels.1
To help unlock trapped working capital, companies can implement a modern AR system that keeps cash flow predictable, even when processes or operations shift during transformations.
The most powerful feature is upfront funding, which converts invoices into near-immediate cash, reducing AR balances to near zero. When paired with automated invoicing and digital payments, it also enhances the customer experience, giving buyers greater flexibility, more control and a smoother path to payment.
“By transitioning to a funded AR model, CFOs effectively eliminate DSO on funded invoices by converting what used to be a 40 to 60 day cash conversion cycle into near-immediate liquidity received in as little as one to two business days,” Boyles says. “That means more predictable cash flow, a stronger balance sheet and reduced reliance on short-term debt.”
The business also gets immediate access to cash for reinvestment into growth initiatives without waiting on collections and reduces its exposure to fraud and non-payment risk.
Customer experience as a competitive advantage
AR challenges don’t stop at the balance sheet — they also show up in customer experience. “When AR isn’t built for scale, growth stalls,” Boyles notes.
For example, when credit decisions take days instead of minutes due to manual checks, customer satisfaction drops, taking your new customers with it. Manual systems are more error-prone, leading to higher dispute rates, slower cash conversion and increased service workloads. Brand perception suffers too when collections feel adversarial rather than collaborative. Customers can become frustrated, and retention and repeat sales suffer.
Modern AR systems address these challenges through intelligent flexibility and data-driven insights. “Companies can segment customers based on payment behavior and risk, allowing them to dynamically tailor terms, reward reliable buyers with flexibility and maintain controls on higher-risk accounts,” Boyles explains.
Boyles recalls a case where improved AR data revealed that several top customers of a newly onboarded partner consistently paid late due to invoice discrepancies. “By using Capital One Trade Credit’s modern, full-service AR solution to address those errors, they were able to reduce disputes and unlock millions of dollars in working capital,” he says.
The dynamic approach of modern AR systems reshapes the buyer experience. When customers can instantly use their available credit across multiple channels and select from a variety of payment options, payments are sped up, and trust and loyalty are built.
Additionally, self-service portals give buyers real-time visibility and control over their accounts, helping to reduce calls, disputes and frustration. These features help businesses stand out and grow in increasingly competitive markets.
Operational efficiency that scales
Legacy AR systems create operational inefficiencies that ripple across finance and the broader organization. These challenges appear in everyday work, with AR teams spending excessive time on manual tasks like invoicing, payment posting and reconciliation. Collections alone require heavy staffing just to keep up.
Additionally, error rates in billing or cash applications lead to costly rework, frustrated customers and delayed payments. At the same time, leaders lack timely, accurate data to make informed cash flow and risk decisions. These inefficiencies combine to reduce profitability and limit agility and competitiveness.
So why do companies stick with broken AR systems? “AR problems are often dismissed as back-office issues rather than growth constraints,” Boyles says. “There’s also change fatigue and fear of disruption. Many underestimate how much manual AR work costs them in lost cash flow and customer satisfaction.”
Even when teams are ready to modernize, the path forward isn’t always straightforward. Many turn to individual point solutions to fix one piece of the process at a time, but this approach often creates new silos and complexity.
Increasingly, companies are turning to full-service solutions that integrate credit, invoicing, collections and payments end-to-end.2 These provide real-time visibility and a centralized, reliable source of data for exposure, aging and risk. “That’s how you achieve transformation, not just automation,” Boyles says.
Companies that modernize see clear benefits: Manual workloads and error rates drop, staff move to higher-value work and more predictable collections fund transformation without surprise cash crunches.
Recognizing AR's strategic position
AR sits at the intersection of sales, operations and finance. That makes it either a bottleneck or a strategic advantage, depending on how you treat it. When modernized strategically, AR can help grow the business by improving cash flow, customer experience and operations.
The key is starting with visibility. A unified dashboard connecting order-to-cash data across systems gives CFOs the insights to prioritize changes in credit management, collections and automation. “You can't modernize what you can't measure," Boyles notes.
For finance leaders navigating through growth, volatility or operational shifts, the goal remains consistent: Keep cash predictable while the business changes. AR modernization makes that possible not through automation alone, but by transforming how data, systems and teams work together.
Ready to turn AR into a strategic advantage?
Partner with Capital One Trade Credit to transform your accounts receivable into a strategic advantage that unlocks working capital, boosts liquidity and drives growth. Get in touch today at [email protected] to learn how we can help.
1. J.P. Morgan. (2024, August). Increasing efficiency: Working Capital index 2024. https://www.jpmorgan.com/content/dam/jpmorgan/images/payments/working-capital-index/increasing-efficiency-working-capital-index-2024-ada.pdf
2. Forrester. (2024, August). Improved Accounts Receivable Efficiency Drives Key Business and Finance Goals. Forrester opportunity snapshot commissioned by Capital One Trade Credit.
