Increasing Cash Flow by Minimizing Aging Accounts Receivables


Slow-to-pay clients and unpaid Accounts Receivables will limit the cash flow that is needed for your business to stay operational. Plan ahead by creating business strategies to eliminate or minimize your unpaid transactions while maximizing your business’ cash flow.

Consider ways to avoid having aging Accounts Receivables:

  1. When negotiating business with any client, let them know your payment terms upfront. In addition, make sure they are pre-notified of the late payment fees incurred if terms are not successfully met.
  2. If your business can bare it, offer payment plans and/or early payment incentives.
    1. Initial deposit on projects and with incremental payments until completion.
    2. Pre-payment, early payment, and automatic payments: 1% decrease of total bill or a specific dollar amount (depending on project size).
    3. Consider strategizing for client service plans that will provide an even cash flow stream for your business and create a long-term business relationship.
  3. An Accounts Receivable schedule should follow a systematic process.
    1. All invoices are due (depending on pre-set terms):
      1. Upon Receipt
      2. Net 15, Net 30, Net 60
    2. Invoices that have not been paid by the due date, should be followed up with a statement of unpaid invoices and notification that late fees will be charged if payment is not received.
    3. Stay on top of all aging Accounts Receivables. The faster the invoice gets paid the greater cash flow increase you will have.

Creating a strategic plan on maintaining a positive cash flow before a problem arises is your best defense in keeping your business financially strong.


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