AP vs. AR: Which One Should You Hire First?

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If you’re building out the transactional layer of your finance team and can only make one hire right now, the AP vs. AR question is worth a few minutes of actual thought. Both functions live in the cash cycle and both affect working capital, but they create very different problems when understaffed, and the right answer depends on where your biggest exposure actually is, not on which one sounds more urgent.

AP vs. AR: What Each Function Does

AP is outgoing cash. An AP Specialist processes vendor invoices, manages payment schedules, handles 3-way matching, and keeps vendors paid accurately and on time. When it’s running well, vendor relationships stay intact, you’re not accumulating late-payment penalties (typically 1.5–2% monthly), and the CFO has a reliable picture of outstanding obligations.

AR is incoming cash. An AR Specialist handles customer invoicing, tracks what’s owed, drives collections follow-up, applies cash receipts, and maintains the aging report. When it’s running well, cash converts faster, which matters a lot more than it sounds when working capital is tight and the next payroll is three weeks out.

When to Hire AR First: If the Cash Isn’t Arriving

Revenue is coming in, but the money isn’t showing up on time. Collections follow-up is inconsistent or nonexistent. The aging report has balances sitting in the 60-day column that nobody has time to work. This is the most common scenario where AR is the urgent hire.

DSO creep is easy to ignore until it becomes a cash crisis. Companies with dedicated AR management typically run 30–45 day DSO; without it, 60–75 days is common. That gap represents a meaningful amount of working capital sitting uncollected. If your DSO has been drifting upward for a couple of quarters, that’s where the hire needs to go.

When to Hire AP First: If Vendor Relationships are at Risk

Late payments damage supplier trust, and in some industries that trust is operationally critical. If vendors are following up on overdue invoices, your AP aging shows a real backlog, or you’ve been missing early-payment discount windows (usually 2% net-10), the payables function needs dedicated attention before the relationship and cost damage compounds.

There’s also a forecasting problem. If outstanding payables aren’t captured accurately and consistently, the CFO is working from a cash position that doesn’t reflect what the company actually owes. Getting AP under control is often a prerequisite to having any faith in your working capital projections.

When You Need AP and AR

Most growing companies need both; the question is just which gap is more expensive right now. AP and AR together give you a complete picture of the cash cycle, and companies that staff both tend to close faster, forecast better, and spend less CFO time buried in transactional questions.

At moderate transaction volumes, a single AP/AR Specialist can handle both functions well. That’s often the right starting point, and it’s worth knowing before you assume you need two separate hires.

Through MAVI, pre-vetted AP and AR Specialists with 3–5+ years of experience can be placed in as fast as five days — at 50–70% less than US-market rates, no upfront fees, 14-day trial before any long-term commitment. Book a call to know more!