What are the consequences of overdue accounts receivable?

Overdue accounts receivable can have several detrimental consequences for a business. Firstly, it can cause a cash flow problem, which can impact the ability of the business to pay its own bills and meet its financial obligations. Secondly, it can damage the relationships with customers, who may become frustrated with the delay in payment and may choose to take their business elsewhere. Thirdly, it can increase the likelihood of bad debt, which can further impact the financial health of the business. Fourthly, it can result in legal action, such as debt collection agencies or court proceedings, which can be costly and time-consuming for the business. Overall, it is important for businesses to effectively manage their accounts receivable to avoid these consequences.

This mind map was published on 24 April 2023 and has been viewed 112 times.