As the publishers of Lockstep Collect credit and collections management software, we work with a variety of companies. We have experience with small companies at around one million dollars in revenue who are using Intuit QuickBooks, up to enterprises managing hundreds of millions of dollars utilizing enterprise ERP business software. No matter the size of the business or which accounting system they are using, many of our customers ask us the same question, “How many staff members do I need for an effective accounts receivable management team?” Unfortunately there is no formula. This white paper was written to help you understand the factors in play so you can answer this question for yourself.

    One way to evaluate your collections staffing needs is to consider revenue per employee. For example, recent reports indicate that S&P 500 companies generate approximately $420,000 in revenue per employee. Smaller companies, however, often generate significantly less revenue per employee – usually around $100,000 per employee depending on the industry. The reason for the huge discrepancy is simple – larger companies have established credit policies, access to automated systems, and full-time, experienced credit and collections staff. Net revenue per employee will vary significantly by industry. But the credit department is still responsible for managing the collection of this revenue whether it resulted from 10 customers or 10,000 customers. We generally see that most companies have at least one part-time accounts receivable clerk when they reach approximately $1 million in annual revenue. Since average DSO is 61 across industries, this means that this part-time resource is managing about $188,000 each month, of which, over $70,000 is likely past due.Smaller companies that have around 10 full-time employees on staff, typically have at least one part-time AR collections clerk. This person usually reports directly to an Accounting Manager or to the President who also participates in the credit and collection process for more complicated customer disputes. This person is usually the backup for the AR clerk’s in cases when he or she is unavailable.
    There are efficiencies to be gained when a company grows because the credit team has more focus on their specialized tasks. A full-time accounts receivable role is typically created when the company starts to approach $5 million in annual revenue. Hiring a full time employee can be as early as $3 million in annual revenue in industries with high volumes of low-margin invoice transactions across a large customer base or closer to $10 million in annual revenue for businesses with a lower volume of high margin invoices for fewer customers.Based on our experience, companies generating $3 million to $5 million in annual revenue will generally have 30 to 50 employees, one of which will be a full-time credit and collection manager.These general recommendations assume that the employee is manually managing the entire accounts receivable, credit, and collections process without specialized software to help them automate their tasks. Note, Microsoft Excel spreadsheets, aging reports, and CRM systems do not count as credit and collection management software as they have no automation to help the collector to prioritize their activities nor do they provide automated customer notifications.
    As mentioned previously, the size of your credit department may be dependent not on revenue per employee, but rather, on revenue per active customer account or on the number of invoices managed each month. This makes a lot of sense when you think about it.To illustrate, let’s consider a capital equipment manufacturer who sells 20 machines a year to less than 20 customers. They can probably manage their accounts receivable much easier than a distributor of commoditized products producing the same annual revenue but at much lower margins. The distributor might have thousands of invoices and thousands of customers compared to the manufacturer.According the CRF report “On Whose Terms?” 39% of business invoices are past due. If we assume that each of these will require some action from the credit professional then we can back into the workload for companies based on the number of invoices they manage on an annual or monthly basis.A well-trained credit and collection professional will be able to resolve most issues in a short-period of time (perhaps as fast as 30 minutes) but they will inevitably have to manage more complex disputes and difficult accounts that could require many hours or days of effort. It is safe to assume that it probably takes at least 30 minutes (probably much more) to resolve non-payment issues.This means that a company generating 1,000 monthly invoices likely spends close to 100 hours per month managing past due accounts or the equivalent of about 12 days per month. This more than half of the available work days in the month and the credit professional typically has other responsibilities within the organization such as invoice creation, cash application, credit risk analysis, etc.

    It is therefore safe to estimate that most companies should staff at least one full time credit professional for every 1,000 invoices created each month (or at least one part-time employee for 500 monthly invoices) – especially if they are not using software for invoice delivery or collections automation. The same principle holds true if they are managing 500 to 1,000 active customers per month assuming that each customer has 1-2 open invoices each.

    For each full-time credit employee a company will also need to have a back-up resource as well as a supervisor. These accounts receivable roles do not necessarily facilitate a full-time position but are important considerations in respect to responsibilities for other staff members inside and outside the credit and collections department.

    Another factor that will affect your collections staffing considerations is related to the products and services you provide and the complexity of the invoice and the payment process. For example, a wholesale distributor could have a relatively cut and-dry invoicing process. The customer purchases a product and they deliver it. Assuming that they delivered the right product free from defects and the invoice was accurate, there should be few legitimate reasons for non-payment. However, manufacturers, construction firms, and professional service providers often don’t have a simple product or service. Customers will dispute the invoice due to product quality defects, delays or issues related to the job, or because there is no supporting documentation to support billable consulting hours on the invoice.The more complex your product or service, the more likely that you will encounter increased disputes that will take more time to resolve with internal resources and interaction with various contacts in your customers’ organization.
    A study conducted by Credit Today indicated that 25% of credit departments do not have adequate accounts receivable personnel to manage their workload. The study indicated that smaller companies with 3 or fewer AR collections clerks felt they were understaffed compared to companies that felt they were adequately staffed with 4.5 full-time accounts receivable staff members. The study also broke out responsibilities for those full-time accounts receivable team members based on the activities they were responsible for managing. This study is consistent with our research as we find that smaller companies, who are more focused on generating revenue though product development, sales, services, human resources, or other aspects of the business, are much less efficient or proficient in managing their accounts receivable. Due to their focus on other critical tasks, accounts receivable is not a priority until it starts to affect cash flow and the company’s ability to pay its employees or to secure working capital for investments in equipment, personnel, expansions, or other initiatives.

Companies that utilize specialized credit and collections management software can just about triple their efficiency per credit and collection staff member. Automation allows them to cut back on time spent prioritizing their activities and more time focusing on outbound calls and resolutions to open disputes.

Paystream Advisors conducted a study in 2013 which showed that companies using automated collection software spent only 6% of their time prioritizing their activities compared to companies without automated software which spent 15% of their time prioritizing their activities. The study also shows that automated collection software users spent just 6% of their time preparing for calls with customers while non-automated companies spent another 15% of their time preparing for their calls.

Specialized credit and collections software helps businesses spend 62% of their time soliciting customers for payment while non-automated businesses spent only 20% of their time actually communicating with their customers. Those who use credit and collections software are more effective in their collections activities due to a higher volume of communication with customers.

The end result for automation is staggering as there is a direct correlation between time spent communicating with customers and a company’s DSO. It can be generalized from this study that the more communication a company has with their customers, the lower their DSO tends to be.


According to a Credit Today study, companies that utilize automated electronic invoice presentment and customer self-service online payment solutions are much more efficient than companies that manually send invoices and process customer payments themselves. This makes sense since the process of creating and printing (or emailing) an invoice is time-consuming and processing customer payments during phone calls can also consume a considerable amount of time.

Credit Today produced a Staff Benchmarking Survey in 2010 that may be useful to help you identify the correct staff size for your organization. The study is $295 but is a valuable resource as it breaks down staff size by annual revenue across various industries, by the number of active accounts, and by the number of invoices created each month.


In most cases small businesses are not adequately staffed to properly manage accounts receivable. On average, most businesses offer customers 28 day credit terms but average days sales outstanding is 67. That means most business customers are taking more than twice as long to pay than the terms you’ve extended to them.

To be brutally honest, in most of these cases the reason for non-payment is your fault. The invoice was sent too late for them to pay you on time, was missing a purchase order, was sent to the wrong person or address, and had the wrong price, the wrong billable rate, or incorrect tax or freight amounts. These mistakes are easy to address if you have adequate accounts receivable personnel to review first-time invoices to new customers to ensure that the problem is resolved and that it doesn’t happen again.

Systems like Lockstep Collect are now available to automate reminder notices to customers when they have invoices that have an open balance that will be due in the next few days. Sometimes sending a reminder is effective in prompting the customer to notify you of issues on the invoice or reasons why they payment will be late which gives you an opportunity to address issues or disputes proactively.


The Pareto Principle, a common rule of thumb that states many events roughly 80% or the effects come from 20% of the causes, applies in most businesses where 80% of revenue comes from just 20% of customers. If you have 1,000 customers, that means that probably only 200 of them represent 80% of your revenue and 80% of your past due receivables.

Systems like Lockstep Collect can help you prioritize collections based on this information. You may want to assign those 200 accounts to someone who can focus on them exclusively and then use the automated system to help manage the remaining 800 customers (20% of your past due revenue). By prioritizing you can keep your lower priority accounts from slipping while your focus is elsewhere.


Systems Maintenance Services is a professional service firm with 600 employees supporting over $150 million in revenue. Revenue came from 2,000 active enterprise accounts. The company was managing over 3,000 monthly invoices which were very complex spanning months to years for the services they provided with many invoices having thousands of line items. Despite their best efforts, the company’s four full-time collectors were struggling to manage their accounts receivable which resulted in a DSO of 67. The collection staff had a hard time prioritizing their accounts, they wasted time researching account and invoice information prior to a call, and they had erratic collection efforts with no easy way to balance collector workloads.

Revenue per employee was around $250,000. Revenue per customer was $75,000 and average invoice amounts were upwards of $4,000. To effectively manage the workload they probably should have had at least double the accounts receivable staff.

Systems Maintenance Services implemented Lockstep Collect in 2012 and gained significant efficiencies in their credit and collections processes without having to hire additional employees. In the first year they were able to reduce DSO to 40 days (excluding just two of their difficult accounts). That’s a 40 percent reduction in DSO meaning that Systems Maintenance was getting paid 27 days faster than the previous year – almost a full month faster! During this time the company continued to grow, adding another 1,000 customers without expanding its staff. In fact, the company was able to reallocate half of one employee’s time to other, more critical business activities.

Check out this YouTube video to hear from Systems Maintenance Services themselves.


There is no easy way to determine the right number of credit and collections staff members until your company evaluates each area of the business – revenue per employee, invoices per month, number of active accounts, complexity of products and services, and other factors. While every company is different, almost every business can be much more effective in managing accounts receivable which is one of the largest assets and sources of working capital.

e2b teknologies, makers of Lockstep Collect can help by providing assistance to help you define your specific business requirements. We can also help you to understand the benefits that automation can have on your business in respect to reductions in days sales outstanding, increases in collection labor efficiency, reductions in bad debt write-offs, and other savings. Our customers typically realize:

  • Average reduction in DSO of 12 days
  • Average of 20% reduction in bad debt write-offs
  • Return on investment in about 2 months

Lockstep Collect is licensed per named user. The software is available for purchase or as a low annual subscription and can be installed on your local server or hosted online. There are typically 2-3 Lockstep Collect users for every full time employee in the credit department when you include their supervisor and their immediate back-up.

For more information about Lockstep Collect or for a personal assessment of your accounts receivable credit and collections staffing and business needs, contact us today by visiting the Lockstep Collect website or by calling 440.352.4700.