Sending an invoice shouldn’t feel like an act of faith. In order to keep cash flow healthy, small business owners must ensure that their accounts receivable balances are cleared on time. Mailing the invoice doesn’t mean the matter is out of your hands. Here are some ways to make sure your cash isn’t either.

Smart Invoicing
Small businesses truly eat, breathe, live, and die on cash flow. So how does a small business owner hasten the actual receiving of accounts receivable?

First of all, be sure that your outgoing invoices are crystal clear. Delineating every detail of a purchase— including price, quantity, and due date for payment—will prevent the kind of confusion that can frustrate a debtor and delay payment. Next, send each invoice with its order rather than waiting to do all your billing at the same time each month. This gives your customer the chance to pay you sooner, and helps your invoice stand out from other bills piling up in a customer’s mailbox.

As a payment’s due date approaches, a quality control call will ingratiate you to your client. It will also give you far more leverage—and increase the likelihood of future transactions—than an invoice alone. If a debtor still has trouble paying on time, contact them quickly. The longer you let an unpaid balance remain unpaid, the less urgent the matter will feel to the debtor. The

Fastest Ways to Pay
One way to ensure fast payment is to accept credit cards. Rates will be better for businesses that conduct a high volume of large transactions. Accepting credit cards often encourages larger purchases, but a business owner should do some careful research and find a merchant account that offers the best rates for their volume of business.

Small businesses owners with customers in different parts of the country may want to consider lock boxes or the Automatic Clearing House Network. The ACH is a nationwide banking network that allows for the bank-to-bank transfer of funds. Like credit card transactions, ACH payments are deposited electronically in your account, without the float time of the bill-and-wait method.

A lock box works on the same premise as the ACH network, using a bank as an intermediary between creditor and debtor. The bank-operated lock box is a post office box where your clients can send their payments. Your bank collects the payments and credits them to your business checking account that same day.

Late Fees and Discounts
Charging interest on overdue balances may provide the type of negative reinforcement needed to spur debtors into paying promptly. The added interest will also help to cover the time you spent waiting for the late payment. “However,” warns Mary Schaeffer, publisher of the Accounts Payable Now & Tomorrow newsletter, “some companies just won’t pay late fees, so you run the risk of losing their business and looking ineffective.”

The inverse strategy may help you retain your return customers. A discount on invoices paid within ten days will appeal to clients looking to save, not to mention promote good will between creditor and customer. But as business grows and volume increases, a percent or two per transaction begins to add up. When the cash starts to flow, don’t let it get away.

Outside Help
If you encounter a debtor who simply won’t pay, you may want to enlist the help of a third party.

COLLECTION AGENCIES A collection agency will take on the job of collecting from a delinquent customer for around 15-35% of the collected fee. The price may be well worth it, as a recent study by Price Waterhouse Coopers reported that collection agencies retrieved $39 billion in 2005. But given the general perception of collection agencies as a punitive last resort, future business between you and your customer may be unlikely.

FACTORS While collection agencies collect a percentage of the balance they receive, factors are companies that buy your past due invoices outright at a discounted rate. This is an excellent way to speed up cash flow, but beware: many factors buy invoices with full recourse. If they cannot collect the balance, they take their money back and leave you, once again, with the unpaid balance.