Maintain a Consistent    Ebb and Flow

1. Conduct an accounts receivable "aging" on a regular basis, ranked by the invoice date, not the statement date.

For example, suppose you ship merchandise with an invoice on the first of the month. Invoice aging will correctly show that, by the end of the month, the account is 30 days old. If you age your accounts according to the statement date, the report will incorrectly show that the account is current.

Aging gives you not only a better handle on how long accounts are overdue but also the dollar amount of your company's receivables outstanding.

2. Regularly reconcile the accounts receivable ledger with the general ledger.

3. Offer discounts for prompt payment, and be sure to keep tabs on which customers receive this incentive. Many companies continue providing discounts to customers whose payments miss the deadlines set for the special deals. This hurts cash flow and chips away at the bottom line.

4. Give customers credit ratings and distribute those ratings to the appropriate departments in your company. This includes sales, customer service and data processing. If you revise a customer's credit rating, adjust every department's records accordingly.

5. Train your sales force to accelerate collections. For instance, an associate can tactfully remind an existing customer of an outstanding bill before selling that customer another product or service. Consider giving your sales team the leeway to reduce late fees or past-due interest charges in exchange for payment on the spot. Instruct your employees to be fair, consistent, and polite in order to maintain a positive future relationship with customers.

For future sales, you may need to take steps to change the way customers pay. If you are selling products, consider requiring a deposit at the time of delivery or before, to help keep your cash flowing. In worst cases, you may need to demand full payment on delivery. If you are selling services, ask for progress payments according to a writen contract.