Last Updated on May 31, 2024 by Dave Schoenbeck
Running a small business can be very complicated, and there are many distractions for the owner. Frequently, I see cash flow management become a secondary duty when business is booming, and there is a perception that it will continue forever. I also know that pushing your customers for payment is uncomfortable.
Unfortunately, employing cash flow controls and strategies is even more critical when the times are good. Here are some proven accounts receivable cash flow strategies ideas for business owners to use to keep your checking account full.
Dave’s Cash Flow Strategies
Review Your Entire AR Process—Most small businesses have a haphazard process. I highly recommend that you draw out a strict timeline and method and create a series of increasingly urgent letters that you can email to ensure that you get paid quickly. The squeaky wheel gets the grease.
Send out Invoices as soon as the Work is Complete. The faster you get the invoice to the customer, the faster you get paid. Most business owners are slow to get invoices out when they are concentrating on the business’s operations.
Hire a Part-timer to Manage the Accounts Receivable – Cash flow improves dramatically if someone is accountable for the timely management of AR. If the leader solely owns the execution, it always gets deferred.
Run your AR Report Every Week—Run the AR aging report and study what is happening. Pay particular attention to invoice aging. Work on invoices older than 90 days first, then >60 days, and then >30 days. Once a week, make some calls to the laggards, and your cash flow will improve.
Learn your Customer’s Pay Cycle – Many clients bill on different cycles. Once you know what they are, you can shoot the gap and make the call just before the bill is due.
Develop Relationships with your Customer’s Account’s Payable Department. Developing a relationship with someone who can move your invoice to the top of the stack is well worth the effort. I have a client that sends candy bars to their contact. It works.
Use your Salespeople to Push for Timely Payment. The most robust client relationship is usually with your salesperson and their counterpart at your client. Many salespeople dislike doing this, but the effect can be powerful.
Hire a Quality Collection Agency for the Last Resort – A few clients always force you to use this method. This customer should immediately be put into the never-do-business again column. I have seen some efficient and respectful collection agencies that can collect old receivables and keep your customers if you decide to do that.
Cash Flow Strategies: Conclusion
These are my top cash flow strategies for managing your accounts receivables. Your business does quality work, and you deserve to be paid on time. Please don’t shy away from collecting the cash that you have earned.
I have many more ideas for your business in the blog section of my website. Click here and learn more.
Thanks,
Coach Dave
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