As always, "Cash is King" and Ron McNutt has written a humorous yet excellent post on how to get the cash flowing IN to your business.
-Pay attention! Simply put, meet with your staff at least weekly, if not daily to review A/R, credit policies, collection issues, etc.
-Set daily goals for collecting. If your goal is to maintain a Days in A/R of 30 days, and your average monthly revenues are $100,000, then your staff should be collecting almost $5,000 each and every day. Therefore, there should be $5,000 in the bucket on Monday, $10,000 on Tuesday, $15,000 on Wednesday, etc. Don't wait until Friday to check the bucket and be disappointed there is only $10,000 versus the $25,000 you expected. Be sure to find out current Days in A/R stats for your industry and strive to stay within them.
-Manage by exception. Call the most significant offenders, maybe the top 20% who owe 80% of your A/R.
-Increase statement frequency, maybe from once a month to every 2 weeks. You probably know the positive effect of paying a mortgage every 2 weeks, what could this same principle do to your business?
-Increase the "notice factor" of your statements by printing them on brightly colored paper. This has been a long standing procedure in collection companies. Maybe even consider sending them in a large 8 1/2 by 11 envelope.
-Always get to know the person who pays the bills. Don't just call them on collection matters, but call and thank them for payments. Remember, "You collect more bees with honey."
-Add additional payment methods and incentives. Take credit cards. Offer discounts for early payment and penalties/interest for late payment.
-Establish payment terms that are favorable to you. Always strive for the longest payment terms possible with your vendors and the shortest payment terms possible with your customers.