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flevyblog
The Flevy Blog covers Business Strategies, Business Theories, & Business Stories.
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Editor's Note: Take a look at our featured best practice, 13-Week Cash Flow Forecast Template (Excel workbook). This comprehensive and user-friendly template is designed to help businesses efficiently manage their cash flow with accuracy and flexibility. Ideal for SMEs, the template provides tools to forecast, track, and analyze cash flow over a 13-week horizon. Key Features: Customizable Settings: [read more]
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Cash flow keeps your business running. You need it to pay suppliers, cover wages, and invest in growth. When money doesn’t come in on time, everything slows down.
Many businesses focus on sales or expenses to improve cash flow. But collections can make just as big a difference. Collecting what you’re owed, on time, is one of the fastest ways to strengthen your financial position.
This is where cash flow optimization starts. Not with more sales or fewer expenses, but with faster payments.
Slow payments are a common problem. Many businesses wait weeks or even months to get paid. That puts stress on daily operations and makes planning difficult.
The cause is often poor collections practices. Invoices go out late. Reminders don’t get sent. Follow-ups fall through the cracks. The result is delayed cash and missed opportunities.
Good collections management solves this. It creates a clear system for getting paid. It also helps your team know when and how to act. That kind of structure helps you improve cash flow without chasing customers constantly.
Common problems include:
Fixing these problems can unlock money that’s already yours.
A good accounts receivable process does more than just send out invoices. It includes every step from billing to follow-up, all the way until the payment is received and recorded. A strong process is organized, consistent, and easy for your team to follow.
Here are a few key parts that make it work:
By modernizing your accounts receivable process, you can improve consistency, reduce delays, and collect more of what you’re owed faster.
Smart tools are changing the way businesses manage collections. With the right technology, you don’t need to chase every invoice by hand.
Software platforms now offer automatic invoicing, reminders, and payment tracking. Many also connect with accounting systems. This gives you a full view of what’s owed and what’s overdue.
For B2B payments, this is especially helpful. Clients want easy ways to pay. Online portals, credit card options, and bank transfers make payment simple. That means you get paid faster.
Tools like Wise-Pay give teams control and visibility. But there are many platforms that support these efforts. Most businesses can benefit from adding even one tool to their current system.
Strong cash flow depends on small habits done consistently. These best practices can help you collect payments faster and keep your finances steady.
Spell out when and how you expect to be paid. Include terms on every invoice and confirm them in writing with each client. Clear terms prevent confusion and give you something to reference if payments are late.
Offer small incentives, like a 1–2% discount, for customers who pay ahead of time. This can encourage faster payments and strengthen customer loyalty.
Check your aging report regularly. It shows who owes what and how long payments are overdue. Use it to plan follow-ups and spot trends before they cause problems.
Reach out as soon as a payment is late. A short message or call within a few days of the due date can keep things from slipping through the cracks.
Make sure your staff understands the payment process and knows how to handle overdue accounts. A well-trained team can reduce errors and speed up collections.
According to Fundbox, more than 60% of small businesses struggle with late payments. This can affect everything from making payroll to ordering inventory and paying taxes on time. To stay ahead, create a clear process, follow it consistently, and keep your team on the same page.
Strong cash flow starts with strong collections. By refining your accounts receivable process and adopting smarter collections tools, you empower your team to manage receivables proactively.
Technology, structure, and strategy together unlock the key to long-term cash flow optimization.
You can download in-depth presentations on Cash Flow Management and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
For even more best practices available on Flevy, have a look at our top 100 lists:
These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.
