How businesses can navigate rising costs through smarter accounts receivable

Rising costs and tighter access to credit are squeezing businesses of all sizes, especially small and mid-size ones. The good news is that optimizing accounts receivable can provide one of the fastest and lowest-risk solutions to strengthen cash flow and reduce dependence on outside financing. 

The current cash flow crunch facing SMBs

For companies of all sizes, but especially small and midsize businesses (SMBs), the current climate feels like walking a tightrope without a safety net. Rising interest rates make borrowing more expensive, longer payment cycles tie up working capital, and banks have tightened lending requirements, leaving fewer options for quick cash. 

The mounting economic pressure of these forces can disrupt the delicate balance between incoming revenue and outgoing expenses. 

Often, businesses overlook their own accounts receivable (A/R) processes when searching for solutions. Improving how you bill, collect, and reconcile payments is one of the most practical and underused ways to boost cash flow and reduce reliance on costly credit lines. 

Why smarter A/R is critical right now

When A/R processes are slow or heavily manual, they don’t just create extra work – they are a drag on your entire operation. High day sales outstanding means you are waiting longer to turn invoices into cash. 

Without clear visibility into when payments will arrive, forecasting becomes guesswork, making it harder to plan for growth or weather a slow month. Opportunities can be missed when capital is tied up in unpaid invoices. 

Beyond the financial impact, manual A/R processes consume an enormous amount of time and human resources. Your team spends hours each week chasing down customers through phone calls and follow-up emails, manually tracking invoice statuses in spreadsheets, and reconciling payments against outstanding balances. 

This repetitive, administrative work pulls valuable staff away from revenue-generating activities like building client relationships, pursuing new business, or focusing on strategic initiatives that actually grow the company.

By contrast, strategic A/R automation can shorten the invoice-to-cash lifecycle, give you more predictable revenue streams, and reduce your need for short-term, high-interest financing. Even modest improvements can free up cash for reinvestment, hiring, or keeping operations running smoothly. 

Where A/R automation drives the most impact

The most dramatic improvements from A/R automation happen in three areas that directly impact your ability to grow: cash flow, collection speed, and team productivity. 

Cash flow

Cash flow predictability stands out as one of the most significant gains from automating your accounts receivables. By streamlining invoicing and payment tracking, companies can forecast revenue more accurately. This makes it easier to plan budgets and investments. 

Collection speed

Another useful tactic is reducing day sales outstanding so you’re collecting payments faster. Having things like automated, multi-channel reminders, intuitive customer payment portals, and embedded payment gateways help customers pay faster. This can help turn what used to be a 60-day lag into a much shorter cycle. 

Team productivity

In industries where staff are often stretched thin, automation frees up teams to focus on high-value relationship building rather than chasing down overdue accounts. The result isn’t just operational efficiency — it’s a financial buffer that allows businesses to act proactively instead of reactively. 

Starting with low-risk automation, like automated reminders, before expanding into more advanced tools can help your team, especially for small- and medium-sized businesses, see the benefits as their comfort level grows. 

Avoiding common pitfalls when optimizing A/R

Of course, technology alone doesn’t guarantee success. Here are some things to avoid:

1. Sidelining your team members: While automation can handle routine processes, judgment calls like credit approvals and exception handling should still require human intervention from you or your employees. 
2. Relying on bad data: Try not to neglect data quality. Automation is only as good as the information it processes, so if an invoice's details or customer records are incomplete or outdated, errors can multiply. 
3. Failing to train employees: Some companies roll out A/R tools without integrating them properly with existing workflows or sufficiently training users. This can lead to underutilized features, wasted money, and frustrated employees. It’s a good idea to regularly audit A/R processes to identify gaps or delays. 

The most effective A/R automation strategies keep humans in the loop, maintain clean data, and make sure every tool lines up with measurable outcomes. 

How to automate your accounts receivable in real life

Successfully automating your accounts receivable is less about flipping a switch and more about building the proper foundation. 

It starts with mapping out your current A/R process to find:

• Where bottlenecks happen
• Which steps take the most time
• Where customer drop-offs occur
• Whether implementing account reconciliation automation could reduce manual work in those stages

From there, it can be helpful to run an automation pilot. Start with one step of your invoice-to-cash cycle to make sure you’re getting a return on your investment. 

Just as importantly, if you have employees, they need clear onboarding and training so that the new workflows become second nature. Businesses that thrive with AR automation often adopt a “test and refine” approach, meaning they make adjustments based on feedback and performance. 

Over time, the technology can become an invisible partner in the background, quietly helping to speed up payments and free up working capital.

Looking ahead: smarter A/R as a long-term advantage

As costs rise and credit access remains tight, businesses that can consistently forecast, collect, and manage cash will be better positioned to compete. 

Strong A/R processes help turn your finance team from reactive collectors into proactive strategists. This shift may provide a competitive edge that compounds over time — reliable cash flow may mean less scrambling for funds, which allows for more deliberate decision making and long-term planning. 

It’s a good idea to revisit your A/R workflows at least quarterly. This is also a good time to evaluate whether your accounts receivable is keeping pace with changes in payment methods and customer expectations. Customer behavior, payment methods, and business volumes change, and your processes should evolve to match. 

The final word

In today’s economy, smarter A/R is one of the fastest and most accessible ways for small and mid-sized businesses to strengthen cash flow. You don’t need to replace your entire financial process; meaningful progress often comes from improving just a few steps in how you invoice, collect, and reconcile. 

Even minor adjustments can help you get paid faster, reduce financing costs, and give your business the breathing room it needs to grow. In a challenging environment, that kind of resilience isn’t just helpful – it’s essential.