Does your analysis of your business’ financial situation indicate a need to improve your cash flow by speeding up collection on your accounts receivable? If so, we suggest that you implement the following options:

  1. Establish a better credit policy, so that you make good decisions about extending credit; consider the use of credit cards.
  2. Tailor your credit policies to different customer groups based on their ability to pay or payment history.
  3. Develop a more effective way of monitoring your accounts receivable — speeding up slow pays and getting payment on delinquent accounts. Ways to accomplish these goals include: Hiring additional personnel to make calls to slow pays or giving existing employees this responsibility, as well as purchasing computer software that will facilitate the management of your receivables.
  4. Develop a written policy for how your business will deal with slow-paying customers.
  5. Require up-front money from those who formerly had credit extended to them.
  6. Evaluate your terms of credit, indicating the interest rate and penalties you charge, when these charges will start and the type of discount you offer for early payment.
  7. Require collateral when you extend credit to a customer, so that you can become a secured creditor if that customer develops serious business problems.
  8. Monitor the industry conditions of your customer groups. Stay attuned to slowdowns and other developments that may affect your customers’ ability to pay on a timely basis, sot hat you can adjust your credit policies accordingly.
  9. Monitor the financial condition of your individual customers, so that you can anticipate problems and make necessary adjustments.