Small Business? Big Receivables Problem

As we wrap up September in about 1.5 weeks or so, it’s go time on managing and collecting cash. I preach cash collections a lot on here as you’ve noticed, but too many businesses aren’t handling this correctly or efficiently.

If you're running a small business and handling invoicing in-house, there’s a good chance you’ve looked at your bank account and thought: “We should have more cash than this.” You’ve sold the product or delivered the service so why isn’t the money there?

The answer is usually tied up in Accounts Receivable (AR). That’s money you’ve already earned but haven’t collected yet and when it’s not actively managed, it becomes a silent drain on your cash flow. The worst part I’ve seen this year? You don’t even realize how much it’s costing you until you can’t pay a vendor, miss a payroll cycle, or turn down a growth opportunity.

The good news is you don’t need to be an accountant to take control of AR and set your team up for success! You just need a simple, repeatable system that works and I’ve done this for a few companies and it’s been a game changer for them!

Here are three practical steps to get a handle on your receivables starting today:

1. Track Every Invoice in One Place: Use a simple spreadsheet or a free tool like Wave or Zoho Invoice. At a minimum, you want to track: invoice number and date, customer name, amount due, payment terms (e.g. Net 15 or Net 30), and the number of days past due. Bonus: Color code by status… green for current, yellow for 15+ days overdue, red for 30+.

2. Set and Communicate Clear Payment Terms: Your invoice should always include the due date, late fees (if applicable), and your preferred payment method (ACH, credit card, check, etc.). If it’s me, steer away from check payments. Ideally, confirm your terms with the client before you begin the work to avoid surprises.

3. Follow Up on a Consistent Schedule: Most clients aren’t trying to stiff you as they’re just busy. Send a reminder at 7 days, a check-in at 14, and a firmer message at 30+ days if unpaid. Put this on your calendar or automate it with tools like InvoiceSherpa or FreshBooks. If you aren’t reaching out in advance to confirm no issues, you’re already failing. Be proactive.

Bottom line: Receivables aren’t a paperwork problem, but they’re a cash flow priority. Managing them well gives you stability, peace of mind, and options for growth.

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