Revenue Is Up 18% But Cash Is Flat: Diagnosing the AR Gap in Growing B2B Businesses

An 18% lift in revenue should feel like progress. Sales teams are celebrating. Forecasts look healthy. The pipeline is strong. Yet when you look at the bank balance, nothing has really moved. In some cases, liquidity feels tighter than it did six months ago.

That tension usually points to one place: receivables.

When revenue climbs faster than cash collections, the gap quietly widens inside the balance sheet. The income statement shows growth. The cash flow statement tells a more complicated story.

Understanding that gap requires digging deeper than DSO alone.

Step One: Compare Revenue Growth to Receivables Growth

Start with a simple comparison. If revenue increased 18% over the past 12 months, how much did total accounts receivable increase over the same period?

If receivables have grown by 25% or 30%, your business is effectively financing customer growth.

Pull these numbers:

• Total revenue this year versus last year
  • Total receivables balance this year versus last year
  • Average DSO trend over the same period

If receivables are rising disproportionately to revenue, that is your first red flag.

Growth should not automatically inflate exposure beyond what was planned.

Check Whether Payment Terms Have Drifted

Many businesses formally operate on 30 day terms but informally tolerate 45 or 60 day behaviour. During periods of growth, sales teams often push for flexibility to close deals.

Ask:

• Have any major customers been granted extended terms in the past 12 months?
  • Are there undocumented term variations?
  • Are large customers consistently paying beyond agreed terms?

An 18% revenue increase driven by customers who pay later than before will distort cash flow quickly.

Sometimes the shift is subtle. A customer who used to pay on day 28 now pays on day 40. Multiply that across multiple high value accounts and working capital tightens.

Look at Customer Mix Changes

Revenue growth often comes from new customers or expanded business with existing ones. Not all customers behave the same way.

Analyse:

• DSO by new customers versus long standing customers
  • Average payment behaviour of the top 10 accounts
  • Exposure concentration among large buyers

If growth is concentrated in a handful of customers with weaker payment discipline, the AR gap widens even if headline DSO appears stable.

Revenue quality matters as much as revenue quantity.

Examine the Ageing Distribution

DSO is an average. Averages hide volatility.

Review your ageing report closely:

• What percentage of receivables are over 30 days overdue?
  • What percentage are over 60 days?
  • Has the 90 day bucket grown recently?

If the tail of overdue invoices is expanding, cash will lag even if new invoices are issued promptly.

The danger is not just late payment. It is the accumulation of unresolved older balances that distort liquidity planning.

Assess Internal Collection Discipline

Growth often stretches internal processes. When invoice volume increases, AR teams may struggle to maintain the same level of follow up.

Evaluate:

• Are reminders still sent consistently before and after due date?
  • Has the frequency of proactive calls dropped?
  • Are disputes being resolved promptly?
  • Are broken promise to pay commitments being escalated?

If revenue has increased but AR staffing and systems have not evolved, process gaps appear.

Some organisations introduce accounts receivable software at this stage to maintain consistent reminder cadence and visibility as invoice volume scales. The objective is to preserve discipline, not simply automate more emails.

Review Dispute Trends Carefully

Invoice disputes often rise alongside revenue growth. New products, new pricing models, or new customer segments introduce complexity.

Track:

• Number of disputes per month
  • Average days to resolve disputes
  • Common dispute reasons

If disputes are increasing, cash delays are often the downstream effect.

Fixing billing accuracy or improving communication upstream can sometimes improve cash flow more than tightening collections downstream.

Analyse Order to Cash Cycle Timing

Growth can expose inefficiencies in the order to cash cycle.

Consider:

• Time between order fulfilment and invoice issuance
  • Delays caused by partial shipments
  • Manual approval bottlenecks before invoicing
  • Credit note processing delays

If invoices are issued late or incorrectly, DSO calculations understate the real problem. Cash may be delayed not only because customers pay late, but because billing itself is slow.

Evaluate Concentration Risk

If a significant portion of the 18% growth comes from one or two major customers, your exposure to their payment behaviour increases.

Calculate:

• Percentage of total receivables represented by top five customers
  • Ageing profile of those customers specifically
  • Payment trends over the past six months

If one large customer shifts from paying in 30 days to 60 days, the cash impact can neutralise broader revenue gains.

Growth without diversification can magnify risk.

Model the Working Capital Impact Explicitly

Sometimes leadership senses pressure but has not quantified it.

Run scenarios such as:

• Impact of a five day DSO increase on cash
  • Impact of top two customers paying 15 days later than usual
  • Impact of a 2% bad debt increase

Seeing the numbers clearly often shifts the conversation from optimism to urgency.

Revenue growth is exciting. Cash stagnation is sobering. Both can coexist.

Conclusion

When revenue rises 18% but cash remains flat, the issue rarely sits with sales. It sits in the structure of receivables. Payment term drift, customer mix shifts, dispute increases, ageing tail expansion, and stretched internal processes all contribute to the AR gap.

Diagnosing the problem requires more than glancing at DSO. It demands segmentation, detailed ageing analysis, and disciplined monitoring. In some cases, strengthening processes with accounts receivable software can help preserve consistency as scale increases.

Growth is healthy only when cash keeps pace. If revenue climbs but liquidity stalls, it is time to look closely at the behaviour inside your debtor book.