Pro Tips
The Hidden ROI of Faster A/R Collections
Aug 24, 2024
Title: The Hidden ROI of Faster A/R Collections
🧠 TL;DR
Faster collections = more cash in the bank, less dilution, and fewer financing headaches. The ROI of accelerating your accounts receivable (A/R) process is quantifiable, immediate, and compounding—yet most companies don’t measure it correctly. This post breaks down the math, the mechanics, and the missed opportunities hiding in your invoice aging report.
💰 The First Principle: Cash Today > Cash Tomorrow
Revenue isn’t cash.
Bookings aren’t cash.
Cash is cash.
If your average DSO is 60 days and you can bring it down to 30, that’s not a “nice-to-have” improvement—it’s an instant injection of liquidity with no change in sales or spend.
📊 Example: What 15 Days Faster Collections Actually Mean
Mid-market SaaS
$15M ARR → ~$1.25M/month billed
DSO = 60 days
Working capital tied up = 2 months = $2.5M
If you reduce DSO to 45 days, you free up 15 days of cash:
→ $625K of unlocked working capital
That’s money you don’t need to raise, borrow, or beg for.
🔁 How Faster Collections Compound
Impact Area | Direct Effect |
|---|---|
Working Capital | More cash on hand = more optionality |
Burn Multiple | Lower, because collections fund operations |
Dilution | Delay or avoid raising at lower valuation |
Bank Covenants | Stay compliant with cash-based thresholds |
Risk Buffer | Absorb late payments, downturns, or churn |
Reinvestment | Fund growth without debt |
🧠 Why Most Companies Underestimate the ROI
They track cashflow, but not DSO.
If DSO isn’t on your dashboard, you’re flying blind.They treat A/R as back-office.
In reality, A/R is a front-line liquidity driver.They optimize payables, not receivables.
It’s easier to push out vendor payments—but that only buys time, not cash.They ignore collections efficiency.
“Our customers always pay eventually” is not a cashflow strategy.
🛠️ How Automation Directly Improves ROI
Manual Collections | Automated + AI-Driven A/R (e.g. Monk) |
|---|---|
Invoices generated manually | Auto-generated based on CRM/billing triggers |
Follow-ups inconsistent | Scheduled and personalized by risk tier |
Email replies unmanaged | Parsed by LLMs for PTPs, disputes, intent |
Reconciliation takes days | Auto-matched with Stripe/ACH/Plaid |
Forecasting is fuzzy | Predictive cash-in pipeline based on behavior |
Every day saved = more liquidity.
Every automation = fewer headcount hours.
Every accurate match = faster cash recognition.
🧮 Simple ROI Formula
Here’s a first-principles way to estimate ROI:
Example:
Current DSO = 60 days → $2.5M tied up
New DSO = 45 days → unlock $625K
Annual cost of A/R automation platform = $25K
ROI = ($625K - $25K) / $25K = 2,400%
You won’t find that return in any ad platform, hire, or vendor relationship.
🧠 Strategic Leverage: DSO Reduction vs Revenue Growth
Path | Effort | Risk | Cash Impact |
|---|---|---|---|
Add $500K ARR | High (sales-led) | Long cycle | Slow trickle |
Reduce DSO by 15d | Medium (ops-led) | Low risk | Fast, direct |
Revenue growth ≠ cash growth.
DSO reduction is faster, cheaper, and guaranteed—because it acts on revenue you’ve already earned.
🧩 What Monk Unlocks
Auto-prioritizes invoices by risk and expected delay
Flags unacknowledged invoices + disputes within 24hrs
Surfaces payment intent in plain English via LLMs
Auto-sends reminder sequences based on timing + behavior
Gives CFOs a live “cash-in forecast” based on customer behavior—not hope
🚨 CFO Checklist: Are You Leaking ROI?
Is your DSO > 30 days?
Do you have >$500K in AR > 60 days old?
Are you spending >10 hours/week chasing payments?
Do you wait for Stripe/QuickBooks to tell you who paid?
Is collections reporting updated weekly or manually?
Are disputes tracked in Gmail/Notion?
If yes to any → you’re sitting on untapped ROI.
🧠 Bottom Line
You already earned the revenue.
You already delivered the service.
But until the cash is in the bank, it’s just theoretical.
Faster A/R collections don’t just clean up operations—they strengthen your financial position, lower your dilution, and let you scale on your own terms. In 2025, automation isn’t a luxury—it’s a liquidity weapon.
