How to Get Cash Out of Your Business

capping off week’s post, I am sharing more of this article by Partner, Charles Sonneborn:

Every business needs cash in order to be successful. When times are good, cash (along with many other important metrics) can be forgotten and overlooked. When times are bad, the individual entrepreneur, small business as well as Fortune 100 Companies (yes, even the auto industry) are in critical need of it. The first thought of small and emerging businesses is to rush to their bank and utilize existing lines of credit or request increases. Unfortunately, this is usually the worst time to approach your banker. Many business owners overlook a valuable asset that can generate some very positive cash flow when managed properly. That asset is their ACCOUNTS RECEIVABLE! The management of Accounts Receivable is often neglected until the business is in desperate times. A good A/R program must be instituted when the business first begins to generate Receivables. The components that need to be developed and maintained are:


1. Establish written credit policies and procedures

2. Identify someone in the organization (i.e. Credit Manager) who will be responsible and have accountability for making credit and collection decisions and take subsequent actions for proper and timely notifications to delinquent customers.

3. Be sure there is adequate computer software to accurately track the Receivables and print meaningful Aging reports.

4. Have all customers, prior to being sold/serviced, complete a Credit Application that will be reviewed and approved by the person who has accountability for Receivables.

5. Subscribe to a credit reporting service (such as Dunn & Bradstreet) so you can obtain pertinent information about your customers prior to shipping/servicing.

6. All accounting personnel responsible for billing must understand that every invoice needs to be generated and mailed in a timely fashion with the invoice date being the date product was sold or services delivered.

7. Print and mail a Statement to each Customer periodically.

8. Develop a relationship with a reputable collection agency in your area.

9. Carefully monitor Customers who consistently take unauthorized deductions.


The collection of your Accounts Receivable should never be ignored or lessened on your priority list. Your customers will eventually respect your tenacity in collecting and will respect you for it. Many times, Customers will delay payments to other Vendors or Suppliers, if they are low on cash, to avert receiving a collection call from you. A well-run Company knows the importance of their Accounts Receivable in good times and bad. As a B2B CFO® partner, I understand the importance of developing sound policies and procedures for Accounts Receivable, and recognize the problems that can occur when they’re not being watched. In many companies, the Accounts Receivable is the single most significant asset, and attention to detail may mean the difference between the success and failure of any business. If you believe that your Company would benefit from further discussions regarding your Accounts Receivable policies and procedures, please contact me to set up a meeting.

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