The Art and Science of The Accounts Receivable World
I was having a conversation recently with someone in the credit and collections field, and she asked me a great question:
“What’s your process when it comes to evaluating both new and existing customers’ credit terms?”
We talked about tools — credit apps, trade references, third-party reports, financials.
We talked about timing — how often we review existing customers, what thresholds trigger a deeper look.
And we talked about red flags — you know, the stuff that looks fine in isolation but screams “bad debt waiting to happen” when you zoom out.
But then I pushed the conversation a little further, and I asked her:
“It is not just about the data though, it is what you actually do with all that data?”
“The analysis can’t be a manual process these days, but it also shouldn’t be fully automated.”
This is one of the reasons why I love what I do, and I love the world of accounts receivable. This world allows you to use both sides of your brain.
Because the truth is…there’s both a science and an art to what we do.
🔬 The Science: Data, Structure, and Process
Let’s start with the obvious.
The science side of credit and collections is about data:
Credit reports and scores
Financial statements
Payment trends
Days Sales Outstanding (DSO)
Aging reports
Industry risk factors
Internal customer history
We gather, compare, calculate, model.
We use tools — spreadsheets, dashboards, scoring systems.
We make decisions based on facts, trends, and thresholds.
And yes, some of that analysis is automated. Some of it’s manual. Most of it is layered with experience.
This part of the job is logical. It’s measurable. It’s essential.
This is the part of the job that is constantly looked at for process improvements, software and technology updates. This is where the use of AI can be best utilized. We can take all of the data, plug it into the technology we have in place, and then get a quick and easy to read synopsis of the situation.
🎨 The Art: Context, Intuition, and Human Insight
But…numbers only tell part of the story.
You can’t always see leadership changes, internal chaos, or a shift in customer priorities in the balance sheet.
You can’t measure someone ghosting your collections emails — until they’ve already gone dark.
You won’t always find the red flag in the numbers. Sometimes, it shows up in the tone of a phone call.
This is where the art comes in.
The art of accounts receivable is:
Knowing when to ask the uncomfortable question
Recognizing the customer that “feels off” even if they’re current
Understanding when to make an exception — and when to hold the line
Reading people, not just payment patterns
Building the relationship with your sales team, so they can tell you the rest of the story that your numbers can’t tell
It’s the instinct you develop after years in the trenches. The gut check you can’t automate.
The part where your brain says the numbers make sense, but your experience says something doesn’t feel right. Or maybe all the data is telling you this is too risky of a situation, but you have enough experience that you have seen this situation before, and you have enough trust in the intangibles and information you are getting from your sales team to know, the data isn’t telling the whole story, and this is worth the credit risk.
🎯 Why Both Matter
Too much science, and you miss the nuance.
Too much art, and you ignore the facts.
The best credit professionals I know, the ones that protect margin and maintain strong customer relationships, have mastered the balance. They know when to lean on formulas and when to trust their judgment.
It’s not always perfect. But over time, it becomes second nature.
So the next time someone asks you what your process is, remember:
You’re not just crunching numbers.
You’re not just managing risk.
You’re doing both — because credit and collections isn’t just a job. It’s a craft.
