Cash Flow Cash Flow by Sid Lieberman Cash flow is a major problem facing industry. Accounts receivable may be a valuable asset for accounting purposes, but you make money by manufacturing a product or selling a product or service. You can never sell your receivables at a profit and you don't make money by reselling your accounts receivable at a discount. And it even costs you money for the subsequent collection of your receivables. Owning receivables never produces a profit, and it only increases your cost of doing business.
Many companies have more money in accounts receivable than they have in net worth.
The illiquidity caused by massive receivables, causes business to fail or to incur excessive operating costs to turn them in to cash once again. Companies make their money when they make the sale. Yet experience shows that it costs a lot of money to collect yesterdays money and make it available for tomorrows needs. You can mail a bill or statement and wait for the customer to mail the check, but then receipt of the funds depends on when the customer writes the check and sometimes that is long past the due date. You can solve your receivable problem, by using a new technology called EFT which stands for electronic funds transfers.