Collecting payments for work performed is one of the largest headaches for small business owners. Many times, customers will pay slowly on outstanding invoices which can create a risk for the business owner as it impacts their ability to pay suppliers, employees and cover their overhead expenses. Below are several tips to streamline the collection process and improve overall cashflow:

• Send invoices as soon as the work is completed. If possible, require that a deposit be paid at the start of the project. Progress billing on lengthy projects allows for payments to be received as work is completed. For recurring projects, set up auto-drafts of the monthly fee so that payments are collected automatically.
• Simplify the collection process by offering online payment options to your customers.
• Offer an early payment discount to encourage customers to take advantage of this option. Receiving payments within 10 days versus 30 days will speed up the receivables process.
• Follow-up with customers on past due accounts quickly. It is best to contact the customer as soon as the payment is past due. The longer the receivable goes uncollected, the less chance there is of collecting the money.
• Consider offering a payment plan to customers who are having significant cashflow challenges. Particularly for long-time customers, showing this flexibility will be helpful in preserving the relationship and building loyalty.

It is important to communicate your accounts receivable process to your customers, so they understand your expectations for collecting payment. Implementing even a few of these suggestions will improve cashflow management and profitability for your business.

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