10 tips to speed up cash flow (from an accounts receivable (A/R) perspective)

  1. ​​​​​Timely collections begin with the sales team:  Communicating with your customer on payment terms during the sales process offers transparency and clarity and always results in more timely collections.
  2. Know your customer’s credit worthiness: Credit evaluations are essential when extending terms to your customers.  You can require payment in net 30, but if they aren’t going to pay until 45 days, how does this impact your cash flow and margins? Factor those costs into your sale or offer incentive to pay early and easily.
  3. Offer easy payment options: We see everything from good ole fashioned checks, to EFT, ACH, credit cards and virtual cards today.  Many small businesses like to simply click a button on the invoice to process payment with their credit card.  Others however, like to manage float and will issue ACH/EFT on a particular date, exactly 44 days past the invoice date for example.
  4. Deliver well-prepared invoices: There are essential elements to a good invoice: total amount due, due date, goods or services rendered, contact information, remittance instructions, and P.O. numbers or proof of delivery or acceptance.
  5. Comply with customer accounts payable (A/P) protocols: The big dogs are controlling the dog park.  Many of the Fortune 1000 companies are moving to vendor portals, dictating how and when they will receive your invoice and issue payment.  The big sale is exciting, but know what it takes to be paid and how terms affect your cash flow.
  6. Send statements regularly: Client A/P departments are busy.  Statements provide an opportunity to identify any missed items or invoices and further avoid delays.
  7. Be the squeaky wheel: Be in contact with your customers before a collection call is necessary.  Consistent communication is key.  We call to verify receipt, address any questions, and show appreciation for their business. 
  8. Streamline your payment processing: Remember the days of having to run to the bank?  Every day that you delay receipt of funds, your availability is affected.  Work with your bank, merchant services provider, or A/R management company to ensure that you are maximizing your availability.
  9. Manage your cash flow: Know your availability, borrowing power, and anticipated cash needs.  This allows for proper planning and avoids excessive fees or rates.  Cash flow projections are essential.
  10. Seek advice, but own the outcome: Advisors are always a key component to success.  However, where we see many business owners fall short is in taking advice without understanding the reasoning or logic and therefore don’t understand the implications, positive and negative.  Seek advice but own the outcome.  (one example is having someone else prepare the cash flow projection and then not managing to it)

Cash is King, Cash is the lifeblood… yadda yadda yadda.  You don’t have to explain that to a business owner… we know it, we live it, we breathe it… and then we get busy and forget to manage it. 

Renee Tyack
Vice President of Sales
Capital Plus, a division of United Capital Funding Group, LLC.
Office: 614-848-7620