Review Your Entire AR Process – Most small businesses have a haphazard process. I highly recommend that you draw out a strict timeline and method to use 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 usually slow to get invoices out when they are concentrating on the operations of the business.
Hire a Part-timer to Manage the Accounts Receivable – If someone is accountable for the timely management of AR, cash flow improves dramatically. 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 the aging of invoices. Work on the >90 days first, then >60 days, and then >30 days. Once a week, make some calls to the laggard,s and your cash flow will improve.
Learn your Customer’s Pay Cycle – Many of your 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 – This sounds crazy, but developing the relationship with the person that 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 Sales People to Push for Timely Payment – Usually, the strongest client relationship is your salesperson and their counterpart at your client. Many salespeople don’t like to do this, the effect can be powerful.
Hire a Quality Collection Agency for the Last Resort – There are always a few clients that force you to use this method. This customer should immediately be put into the never-do-business again column. I have seen some very effective and respectful collection agencies that can collect on old receivables and keep your customers if you decide to do that.
These are my top cash flow strategies for managing your accounts receivables. Your business does quality work, and you deserve to get paid on time for it. 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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