By Thomas Aronica

Starting a business can be a rewarding experience. For most entrepreneurs and small business owners, the formula for running a profitable enterprise is relatively simple. Develop a great product or service, generate sales, and the money will roll in.

Not surprisingly, many of these same businesses are often shocked by the challenges associated with getting paid for their efforts. In short, managing accounts receivables can be a nightmare and frequently results in something more productive ending up on the trash heap. Late payments become a total drain on cash flow and is one of the most common reasons why business run into financial hardship.

Intuit QuickBooks recently completed a global study titled The State of Small Business Cash Flow. The results were frightening, clearly showing that managing A/R is one of the most neglected business disciplines. Here are some of the findings:

  • 69% of small business owners are kept up at night with concerns about cash flow.
  • One-third of small businesses have more than $20,000 in outstanding receivables.
  • The average outstanding accounts receivable is $53,399.
  • Only 53% send out invoices on a specific date.

It’s no surprise there is a high failure rate for startups. So, what can be done to make sure these small business owners can get a good night’s sleep?

Here are the Top 10 for managing A/R:

  1. Make sure your customers understand that, as a business owner, you take collections seriously. That starts with the initial conversation. You provide a product or service and your customers are expected to pay, on time every time.
  2. Send your invoices out immediately when they are created. Do not delay.
  3. Offer incentives for early payments and reward positive behavior.
  4. Enforce your payment terms and always send a reminder on the due date.
  5. Routinely follow up as your invoices become past due.
  6. Assess late fees. It will deter bad behavior.
  7. Make it easy for your customers to pay when and how they want. Just because you are open 9 to 5 doesn’t mean that’s when it’s convenient for them to pay.
  8. Offer multiple payment methods (credit, debit, ACH).
  9. Automate the busy work.
  10. Be consistent.

For small businesses, this list might seem like a tall order. And let’s face it, making those collections calls is a task no one wants to perform. But in order to run a successful business, managing your accounts receivable (efficiently) is a necessity.  Luckily, small business owners can now leverage systems like Biller Genie to automate most—if not all—these tasks and streamline accounts receivable. These systems act as a “virtual assistant” that make billing, invoicing and collections a disciplined priority which helps improve cash flow.  Equally as important, by automating busy work, you free up administrative departments to focus on what’s important—growth.

In short, small businesses that take A/R seriously are more profitable. And along the way, owners will get much needed sleep.

Thomas Aronica is CEO and founder of Biller Genie, a leading developer of innovative features that automate the invoicing and accounts receivable processes. The new platform helps small and mid-sized businesses work smarter and improve cash flow. Biller Genie also reduces administrative expenses by standardizing and automating invoice procedures and follow-up initiatives.

Accounts receivable stock photo by StockEU/Shutterstock