Bank of America Targets the $600 Billion Accounts Receivable Problem

Watch more: Need to Know With Bank of America’s Andy Murphy

Staring down an operating landscape defined by supply chain disruptions, inflation volatility and geopolitical uncertainty, finance leaders have grown accustomed to managing liquidity as if it were an external constraint. But a new challenge is emerging from within the enterprise balance sheet itself: the growing weight of aging accounts receivable (AR) and the operational friction required to turn invoices into actual cash.

“[Research is showing that there are] signs of deterioration in day sales outstanding (DSO),” Andy Murphy, director in global receivables, Global Payments Solutions at Bank of America, told PYMNTS, referring to the metric that tracks how quickly companies collect payment after a sale.

Murphy cited data estimating “anywhere up to $600 billion trapped in excess working capital in accounts receivable alone in the U.S.” Much of that sum, he noted, consists of overdue invoices that have drifted beyond expected payment windows.

Extended payment terms are part of the story, but so are inefficiencies embedded in long-standing AR processes. After all, even the accounting treatment of receivables can obscure the true impact when aging risk sets in.

“Outstanding receivables can often appear as a potential asset on a balance sheet, whereas, in reality, they act as a liability until those … are ultimately paid and applied,” Murphy said.

That distinction matters beyond just the dashboard numbers. Capital tied up in unpaid invoices cannot be deployed to fund growth, pay suppliers or reduce borrowing. In more strained cases, as Murphy noted, delayed collections can push companies into short-term financing that “can be very expensive.”

The result can be a paradox familiar to many CFOs. Company revenue is booked, business margins appear intact, yet corporate cash conversion lags behind expectations — to the collective tune of hundreds of billions of dollars.

Against this backdrop, AR automation represents more than a technological enhancement; it is a strategic shift toward treating cash flow as a managed outcome rather than a residual effect of sales activity.

Why Legacy Models Keep Liquidity Stuck in a Real-Time Economy

Aged receivables are often treated as an inevitable byproduct of growth, particularly in industries with complex billing structures or extended payment terms. But their impact runs deeper than delayed cash. As receivables age, they become less predictable, more expensive to collect and increasingly likely to require write-offs or dispute resolution.

As digital invoicing, embedded payments and globalized customer bases accelerate transaction velocity, receivables management is following the same trajectory as treasury and procurement before it: from manual function to data-driven discipline.

Murphy noted that in legacy AR models, collections teams typically review aging reports, prioritize accounts by invoice date and value, and then initiate outreach, which is often done manually.

“That reactive approach … means that quite often companies do not necessarily have the capacity to reach out to all of their customers with outstanding invoices,” he said.

The reliance on static data also limits visibility into behavioral signals that might predict late payment before it happens and is becoming something harder to justify as finance organizations digitize other parts of their operations.

The emerging alternative is not simply faster collections but a redefinition of what collections means. By evaluating risk holistically, combining aging data with transaction patterns and payment behavior, companies can intervene earlier and more selectively.

Rather than waiting for invoices to age into risk categories, today’s advanced systems are able to analyze payment histories, customer profiles and behavioral trends to identify which accounts are likely to delay payment. The shift replaces blanket follow-ups with targeted engagement, reducing friction in customer relationships while improving recovery outcomes.

“It means that companies can avoid reaching out to their more reliable customers who are always likely to pay,” Murphy said, “and instead focus their efforts on engaging those customers who are genuinely at risk before they fall into delinquency.”

How Automation Helps Unlock the Cash Companies Already Earned

Finance teams are beginning to treat receivables as a forecastable, actively managed component of working capital rather than an after-the-fact reconciliation exercise. Today’s solutions are a far cry from those of years past when it comes to both ease of integration and flip-the-switch operational impact.

“It can be easy to think that we need to completely demolish and rebuild our entire organizational process, but that’s not the case anymore,” Murphy said, stressing that AR modernization should not be viewed as a sweeping transformation project. “It’s more about integrating these solutions into existing AR processes to streamline and automate them.”

The emphasis from providers, like Bank of America, is on embedding intelligence into workflows that already exist, allowing companies to unlock value without large-scale disruption.

As Murphy put it, there is “an increasing recognition of the challenges in AR, but also the importance and availability of solutions” to assist businesses.

For finance leaders seeking predictability in an unpredictable economy, the path forward may start not with new sales, but with finally collecting on the ones they’ve already made.