This lesson examines strategies for managing trade receivables to accelerate cash inflow. The ACT syllabus requires the ability to recommend appropriate tools to manage trade receivables to optimise the working capital cycle .

3.1 Receivables Management Fundamentals

Trade receivables represent money owed by customers. Effective receivables management can accelerate cash inflow, reducing the cash conversion cycle. The ACT syllabus covers segmenting customers to apply appropriate collection strategies, receivables processing (using direct debits and SEPA), and improving metrics through invoice generation, trade discounting, and e-invoicing .

3.2 Optimising the Receivables Process

Strategies to improve receivables metrics include accelerating invoice generation, offering volume discounts and rebates to incentivise early payment, and adopting e-invoicing to speed up the billing and payment cycle . The syllabus also covers the use of factoring and forfaiting as specialist risk management tools for international trade .

3.3 Key Performance Indicators

The ACT syllabus includes key metrics such as Days Sales Outstanding (DSO) and the impact of changing receivables terms on the organisation’s cash and liquidity position . The ability to analyse the impact of working capital changes through appropriate calculations is a key learning outcome .