In Part 1 of the Cash, Risk & Returns series, Nana and Nick focused on why Accounts Receivable sits at the centre of strong financial performance. They highlighted how cash flow, credit risk, and return on working capital are tightly connected—and why CFOs depend on AR visibility to make confident, strategic decisions. The session set the foundation for understanding AR not just as a collections function, but as a key driver of business stability and growth.
AR is one of the biggest levers a CFO has—if it's healthy, the whole business is healthier.
– Nick Cooper
Nana Le reinforced this mindset shift,
The goal isn’t just to collect; it’s to understand what’s happening behind the numbers.
Now, in Part 2, the focus shifts from strategy to operations: the day-to-day AR metrics that keep managers firmly in control.
In this follow-up session, Nana and Nick explore the five practical AR metrics that shape cash flow efficiency, strengthen risk management, and guide smarter decision-making across the business. While the formulas behind these metrics are simple, the insights they reveal can transform how teams approach collections and customer management.
The AR-to-Sales Ratio shows how much revenue remains unpaid after the collection cycle. When this number runs high, it signals a cash flow issue that often points to deeper operational challenges such as late payers, weak credit controls, inefficient follow-ups, or rising dispute volumes.
To help improve this metric, ezyCollect is building payment policies that will reward early payers and apply penalties to habitual late payers—shaping customer behaviour proactively.
The aging report is the backbone of any AR process. Its real value shines when it is reviewed frequently and paired with defined actions for each overdue bucket.
Benchmarking against your industry is key, as each sector has its own natural payment patterns.
ADD measures how many days customers pay beyond your agreed terms. It reacts quickly when payment behaviour shifts, making it one of the earliest indicators of potential cash flow stress.
In a tightening economic climate, ADD becomes even more important to monitor.
Disputes are one of the most disruptive elements of AR—and many originate from internal issues rather than customer behaviour.
Slow dispute resolution delays cash, increases workload, and can damage customer trust. To help businesses manage this better, ezyCollect is exploring a centralised dispute management tool, enabling two-way communication directly within the customer payment portal.
The cost of AR, or “cost of carry,” puts a real financial value on the impact of overdue invoices. For example, carrying $100,000 overdue for 30 days at a 12% annual cost results in around $1,000 lost in that month.
This metric helps quantify the true expense of slow payments—beyond the operational frustration.
In the final poll during the session, attendees chose credit assessment and onboarding as the top improvement area. Strong onboarding helps filter out risky customers early, reducing future disputes and creating more predictable cash flow.
As one attendee summarised perfectly,
If you start off with a good client, your risk is low from the start.
(00:01)
Good morning, everyone, and welcome to ezyCollect’s webinar today. I'm Nana Le, Head of Finance and Business Insights. Today, we'll continue our Cash, Risk and Returns series—Part 2: The AR Metrics That Keep Managers in Control. Joining us again is our regular guest speaker, Nick Cooper, our CFO.
Nick:
Hey everyone, thank you, Nana. It's great to be back. I joined as a special guest for the last session and obviously did an alright job to be invited again for Part 2, so that's very nice—thank you. I promise this won’t be just your typical AR numbers chat. We hope to run you through the key metrics we track and monitor, and how ezyCollect can help you understand them better to keep you collecting faster—and keep your CFOs happier.
That's the aim for today, within about 25 to 30 minutes.
Nana:
Absolutely. In 30 minutes, we'll review the five operational AR metrics you can use to power your cash flow engine. Before we dive in, let's take a quick quiz to understand our pain points.
(01:22)
Which is the biggest challenge in your day-to-day AR operations?
A. Customers consistently paying late
B. High volume of disputes or slow dispute resolution
C. Lack of visibility or real-time reports
D. Balancing credit risk with sales pressure
E. Chasing too many invoices with too little time
Let’s see what everyone thinks. Nick, what do you find toughest for you and our team?
Nana:
For us, I’d say it’s about keeping our team on top of all the metrics in the most efficient way. There are so many areas to look into. So for me, it’s probably C—lack of visibility or real-time reporting, and this is something we're striving to improve in the next few months.
Nick:
Based on the results coming through, most people are saying customers consistently paying late, which is painful. It’s the one thing everyone wants to target and improve, but it's also the hardest to control. Very interesting.
POST-CHECK METRIC: AR-TO-SALES RATIO
(03:31) Nana:
Let’s kick off with the post-check metric: AR-to-Sales Ratio. It shows how much of your revenue is stuck in unpaid invoices, and gives you an idea of how hard your cash is actually working.
Nick:
That’s right. It’s a straightforward ratio—how much of your accounts receivable is still left uncollected after the collections period.
For example, if you had $500,000 in sales in the period and $100,000 outstanding at the end of the collection cycle, your ratio is 20%.
Where it's really useful is in understanding how you sit within your industry.
Manufacturing & Construction: 20–40%
Wholesale & Distribution: 15–30%
Retail: 10–15%
You want the ratio as low as possible, but benchmarking against peers is critical because certain industries simply have longer or more complex payment behaviours.
Nana:
So if your business should be in the 10–15% range but you’re actually at 30%, it’s a serious cash flow leak.
Nick:
Exactly. If it’s high, you need to understand what’s driving it. Slow-paying customers are the obvious answer, but behind that there may be weak credit policies, unenforced payment terms, or relationship issues that need to be investigated.
Within our Credit Insights module, we can identify patterns such as whether you’re being paid later than others by the same customer. Sometimes late payment is a financial issue, but often it’s a process or relationship issue.
Other drivers include:
Process inefficiencies
Disputes and deductions
Teams giving extended payment terms too freely
But the good news is there are simple ways to improve:
Automated reminders and follow-ups
Digital payments and upfront collection authorities
Payment plans
Stronger upfront credit checks
Structured dispute resolution processes
We see massive improvements when partners use direct debit authorities and digital payments.
Nana:
I totally agree. One exciting thing on our roadmap is payment policies, which will incentivise early payments through discounts and apply penalties for late payments. Our team is working hard on delivering this feature.
Nick:
Yes, and Nana has been instrumental in guiding this feature. As the finance team of ezyCollect, we experience the same day-to-day challenges as AR teams, so we feed our learnings directly into the product. Payment Policies will be a game changer—rewarding good payers and creating consequences for persistent late payers.
AR AGING REPORT – THE NAVIGATION SYSTEM FOR COLLECTIONS
Nana:
Now let’s talk about the AR Aging Report—the navigation tool for collections. What’s your take?
Nick:
It’s a classic. Everyone should be across it, but it’s often analysed too late—quarterly or even every six months. You should be reviewing it at least every fortnight.
The important thing is not just analysing it, but having clear actions for each bucket:
Risk-based follow-ups
Pre-emptive reminders
Automated statements as soon as invoices tip over into a new bucket
Escalation paths within your team
You don’t want anything sitting in 90+ days—that’s when collection chances drop dramatically, and you might need a debt collection partner. Having a good relationship with a debt collection partner is important. It can actually be a low-touch and efficient process if used proactively.
Industry norms vary:
Wholesale: heavy 30–60 days
Construction: often 40–60+ days due to milestones and approvals
Retail: mostly 0–15 days due to cash-on-delivery models
Again, it’s critical to know where your business sits relative to your peers.
AVERAGE DAYS DELINQUENT (ADD)
Nana:
Average Days Delinquent may not be as popular as DSO, but it tells you the real number of days customers pay late. For example, if an invoice has 10-day terms but payment lands on day 29, ADD is 19 days.
Nick:
It’s a simple metric but a powerful lead indicator. If ADD starts rising, something is going wrong.
Across sectors, we saw:
Manufacturing & Construction: 30–60 days
Retail & SaaS: 10–15 days
Health & Education: surprisingly high at 40–90 days
There may be government-backed programs or administrative delays behind that.
Nana:
ADD is usually the first metric to spike when something goes wrong—at macro or micro level. With the economic headwinds expected in 2025, many companies are more vulnerable to cash flow stress, making ADD a critical metric to track.
DISPUTES – THE SILENT CASH FLOW KILLER
Nana:
Now let’s talk disputes. They show up unexpectedly and turn everything upside down.
Nick:
Exactly. Tracking disputes and their resolution time is crucial. Many disputes aren’t customer problems—they’re process problems:
Missing PO numbers
Wrong quantities
Missing delivery notes
Unclear invoice descriptions
Some customers don’t even tell you they’re disputing—they simply don’t pay. Worse still, some dispute directly with the bank, and you only find out when notified.
We’ve been exploring dispute management features within ezyCollect because centralising dispute communication makes a huge difference. We’ve prototyped a system where customers can raise disputes directly through the payment portal, triggering a two-way conversation.
This would allow:
Earlier identification
Faster resolution
Better tracking
Less revenue stuck in limbo
We’d love to gauge interest from our audience about bringing this prototype to life.
COST OF AR
Nana:
We’re running out of time, so let’s touch quickly on the final metric: Cost of AR.
Nick:
If you don’t collect cash on time, there’s a cost:
Cost of capital
Overdrafts or working capital loans
Lost returns
Inflation
Opportunity cost
Risk cost
For example, if you have $100,000 outstanding and your cost of carry is 12% annually, and invoices are unpaid for 30 days, that’s about $1,000 lost in a single month.
Industry averages for cost of carry:
Manufacturing & Construction: 5–10%
Wholesale: 3–6%
Retail: 1–3%
Few people quantify this loss, but they should.
FINAL MINI SURVEY
Nana:
If you could improve just one thing in your AR process today, what would it be?
A. Better credit assessment and onboarding
B. Automated reminders and workflows
C. Online payments
D. Stronger dispute management
E. Clearer reporting and analytics
Nick:
I’m a big believer in credit assessment. Why onboard customers with poor payment behaviour? In today’s digital environment, knowing exactly who you’re trading with is crucial. It improves collections and reduces the risk of bad debt.
Nana:
Exactly. As someone mentioned in the comments, starting with a good client means lower risk from the start and less action required—saving time and cost.
WRAP-UP
Nana:
Thank you everyone for joining our webinar. If you want deeper breakdowns and tools to apply these metrics, head to our ezyCollect Academy page—full of practical resources you can use immediately.
Thanks, Nick, for being our guest speaker again.
Nick:
Thank you, Ms Le. I appreciate the second invitation to return—very welcome. Thank you for having me.
Nana:
Thank you everyone. Have a great day.
