What is the impact of delayed accounts receivable on a business?

Delayed accounts receivable significantly impacts a business by straining cash flow and potentially creating operational issues. When payments from customers are not received on time, it hampers the company's ability to meet its own financial obligations, such as paying suppliers, employees, or servicing debt. This cash flow unpredictability can lead to increased borrowing or reliance on lines of credit, escalating costs due to interest, and may even result in operational disruptions if the business cannot fund its necessary expenses or investments. Consequently, the overall health and sustainability of the business may be compromised, making timely collections a critical aspect of maintaining smooth operations and financial stability.