Six Ways to Better Manage Your Accounts Receivables

This guest post is by Denise O’Berry, author of Small Business Cash Flow: Strategies for Making Your Business a Financial Success a book about how to get, manage and keep your cash flow on an even keel and where it belongs — in your business.

Because you, like many small business owners, forgot that you have to get paid to have a real business. That typically means issuing invoices and waiting for payment. Perhaps you’ve forgotten to bill for what you sold or maybe past due invoices are collecting dust in a corner. It’s time to turn that around right now. Here are six tips you can implement right now to get you on the right track.

1. Don’t be an invoice laggard — If you must issue invoices to collect your fees, make sure you get them out the door as soon as the work is done.
2. Set up drip payments — When you negotiate a contract to complete work, set it up so you get paid by deliverable. That way you have cash coming in the door periodically rather than waiting until the project is done.
3. Hold the goods — If you provide a service where you can place the deliverable in a transition state before final delivery to the client, do it. Give them an opportunity to give the project a final okay followed by payment before you release the product.
4. Offer discounts — Provide an incentive for your customers to pay their bills. If you normally require payment within 30 days, offer a small percentage off (5% to 10%) if they make the payment in 15 days. Everyone wins with this strategy.
5. Get on the phone — If payment is due from customers within 30 days and you’ve reached day 31 without a payment, call the customer pronto. The sooner you take action, the sooner you’ll get your money. Old invoices don’t die, they just become noncollectable.
6. Diversify payment methods — Give your customers options for paying you. Offer check, credit card, paypal, money order, and cash (yes!). The more options you offer, the less excuses people have for not paying.

So there you go. Six things you can do today to start improving your cash flow. And here’s a bonus tip. Never forget that your company is not a bank. Whenever you do work and wait to collect payment, you are actually floating a loan to your clients. Do whatever you can to turn that around.

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