Poor management of AR can lead to several risks, including:
Cash Flow Issues: Delayed payments can strain a startup's cash flow, making it challenging to cover operational costs. Bad Debts: Failure to collect AR can result in bad debts, which negatively impact the profitability of the business. Credit Rating: Inconsistent cash flow can affect the business's credit rating, making it harder to secure financing. Customer Relations: Poor AR practices can damage relationships with customers, leading to a loss of business.