If your A/R is a significant percentage of your income, you may want to do some further analysis to understand how far out are the accounts – 30, 60, 90 days? Here are some tips to reduce the size of the accounts receivable:
• Add a merchant account. Your customers might find it easier to pay you because you accept credit cards. The additional fees and bookkeeping costs may be worth it.
• Factor your receivables. Sell your receivables to a finance company for a factor (percentage) of the total. The fees may end up being small in relation to the impact the increased cash flow has on your business.
• Offer an early payment discount. Make it simple and let the customer know up front and you might start receiving payments early.
• Ask for a retainer — or a down payment to get work started. Ask for the entire fee up front.
• Track the credit worthiness of your customers. Try connecting their billing to the level of their purchases.