How a Commercial Cleaning Company Cut Its Collections Cycle From 68 Days to 34
Sam's List Editorial | 2026-07-28
How a Commercial Cleaning Company Cut Its Collections Cycle From 68 Days to 34 This is an illustrative scenario, representative of the kind of receivables cleanup work described below. Details are anonymized and the figures are for illustration; results vary by business and are not reliable. The company was profitable every single month and borrowed money to make payroll almost every single month. Both of those things were true at the same time, and the owner could not explain it. That is the whole shape of a receivables problem. This representative accounts receivable collections case study follows a commercial cleaning company with roughly 2 million dollars in annual revenue that carried 68 days sales outstanding and treated a line of credit as working capital. The Problem Forty-some commercial accounts on net-30 terms. Office buildings, two medical groups, a handful of retail locations, one property management company that represented about a fifth of revenue. The profit and loss looked healthy. The bank account did not. Every month the owner drew on the line of credit around the 25th, paid it back partially when a batch of checks landed, and drew again. The balance had not been below 60,000 dollars in two years, and the interest was quietly one of the larger line items on the income statement. The owner's diagnosis was that customers paid slowly and there was nothing to be done about it, because these were good accounts and nobody wanted to antagonize a good account. That diagnosis was half right. The Diagnosis Three things surfaced once someone actually looked at the receivables in detail. The first was that nobody produced an aging report. The bookkeeping software could generate one in a click, and no human being had ever opened it. There was no list of who owed what and for how long, which meant collections happened by memory, and memory prioritized whoever called to complain. The second was invoicing lag. Work was completed at month end. Invoices went out around the 12th of the following month, because that was when the crew timesheets got compiled and reviewed. Net-30 terms starting on the 12th meant the clock started eleven days late on every single invoice. That lag alone accounted for a large share of the 68 days, and it was entirely self-inflicted. The third was ownership. Collections belonged to nobody. The owner did it when cash got tight, which is the worst possible time to start a payment conversation, because it turns a routine follow-up into an obviously desperate one. There was also a concentration finding that mattered more than...
