Cash flow is constantly on the minds of A/R professionals. It flows into your business from customers who pay invoices, and it flows out as you pay off business expenses. Keeping track of your company’s cash flow is one of the most important aspects of a business. The following tips can help keep your company’s cash flow positive.
Try negotiating billing terms with your vendors that will work with your business’ billing cycle. If you are able to invoice your customers for products or services rendered, the incoming cash flow can be used to pay off any vendors that you owe.
Let your customers know from the start what your accounts receivable policies are. This can be accomplished by providing customers with a clearly outlined document at the time contracts are signed or when business begins. A phone call or email to your customer during the billing cycle reminding them of when payment is due can also be effective, and your customer will know exactly when payment is expected.
Keep Tabs on Unpaid Accounts
Each month, create a spreadsheet with all of your current accounts, indicating which are due and on what date. Keeping the list organized by the due date will allow you to stay on top of these accounts. As the due dates approach, you will be ready to make those calls or email to avoid late payments.
Consider Using an Outside Collection Agency
Most likely, at some point, some of your accounts will go unpaid, and you’ll be faced with a decision to try and collect yourself, write off the debt, or turn to an outside collection agency. Using an OCA to collect unpaid debt is a great option that can actually help your business grow.
Positive cash flow is critical to the success of any business. Unpaid accounts can negatively affect your company’s bottom line, which is why monitoring and maintaining positive cash flow is key.
Want to learn more about credit management? Check out these other articles below:
- Understanding the Balance Sheet
- Understanding the Cash Flow Statement
- Basic Outline for Developing a Credit Policy
- Cash Flow and DSO
- Credit and Collection Policy Basics
- Credit Extensions are Loans
- Credit Group Spotlight: GAIN
- Credit Group Spotlight: NCCA
- D/P, D/A and Their Use in International Sales Transactions
- DuPont Analysis
- Final and Binding Arbitration: A Quicker, Cost Effective Alternative to a Lawsuit
- Measure and Manage Collection Efficiency Using DSO
- Receivables Based Financing
- Resolving A/R Disputes
- The Proforma Invoice and Its Value in Export Sales
To learn more about our commercial collection agency services, contact us at 844.937.3268 today!