Accounts Payable & Receivable

What it means

AR = money customers owe you. AP = money you owe suppliers.

Why it matters

The two levers behind DSO and DPO — direct impact on cash.

How to calculate — with Cawan's Shoes

Cawan's Shoes AR/AP snapshot: • AR: $40M outstanding, target 30-day DSO, actual 29 days ✓. Aging: 0-30d $30M, 31-60d $7M, 61-90d $2M, 90+d $1M (Foot Zone dispute). Bad-debt reserve 1% = $400k. • AP: $30M outstanding, target 45-day DPO, actual 45 days ✓. Top 5 suppliers = 62% of spend; 2%/10 net 45 early-pay discounts captured on $8M ($160k saved/yr). • Weekly collections cadence + auto-dunning email at day 25, 35, 45. Every 1 day of DSO reduction = $1.37M cash freed.

What's at stake if you ignore this

Unmanaged AR = bad debt. Unmanaged AP = broken supplier relationships.