Hardwood Floors April/May 2026

Finance (Continued) itemized charges, taxes, and the total amount due. If possible, use accounting or invoicing software to automate the process. Not only will this speed up the invoicing process and reduce errors, but it also will allow you to track your outstanding receivables as well. MAKE INVOICE time. If possible, consider accepting multiple payment methods, such as credit and debit cards, ACH bank transfers, wire transfers, online payment portals, or mobile payment options. If you can, include a payment link with any electronic invoices you send. MONITOR ACCOUNTS RECEIVABLE To manage your accounts 3 PAYMENT CONVENIENT The more payment options a customer has, the more likely they are to pay their invoice on an accounts receivable aging report. This will allow you to identify overdue accounts and follow up before problems escalate. If you are interested in taking an in-depth look at collection efficiency, there are a couple of metrics you can calculate to track these variables. These two metrics are the receivables turnover ratio and the days sale outstanding (DSO). The receivables turnover ratio shows how often a business collects its outstanding receivables within a given period and is calculated by dividing net credit sales by the average accounts receivable balance. A higher turnover rate means a more efficient collection process and better credit risk management. DSO measures the average number of days it takes a business to collect a payment after a credit sale. The DSO is determined by taking the average accounts receivable balance divided by net revenue, then multiplying that result by 365. A lower DSO means faster collections and less cash tied up in receivables. Maintaining a low DSO increases cash flow and can reduce reliance on external financing. 4 receivable, you need to monitor your receivables balance regularly using

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CREATE A COLLECTIONS PLAN Small businesses may hesitate to follow up on overdue invoices because of concerns about damaging customer relationships. However, professional and consistent follow-up can strengthen relationships by reinforcing

clear expectations. Develop a systematic collections plan with clear steps and timelines for follow-ups, including reminder emails and phone calls. Keep all communication professional, factual, and respectful. DISCOUNTS AND FINANCE CHARGES To incentivize prompt payment, consider offering discounts to customers who pay their invoices early. Conversely, implementing a finance charge for delinquent payments can help to offset the costs associated with delayed cash flows. Make sure to clearly communicate both policies to your customers so they understand the benefits of paying on time. Effective accounts receivable management is about being organized, proactive, and professional. When done well, it can help support sustainable long-term growth and success for your business.

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