Skip to main content

6 ways to keep cash flow, and your business, healthy

Find out how to maximize accounts receivable to keep business cash flow healthy. Presented by Chase for Business.

minute read


    Managing business cash flow is integral to the success of any small business. The ability to consistently bring money into your business (accounts receivable) is important for growth and stability.

    On the other hand, overdue customer accounts and unpaid invoices may limit business cash flow and negatively affect your business growth, brand perception, customer relationships, credit score and long-term success. A big reason many businesses fail is because of cash flow/cash management issues.

    By following these six strategies, you may be able to maximize your accounts receivable and maintain or increase your cash flow.


    1. Monitor accounts receivable

    From pen-and-paper account ledgers to sophisticated online and stand-alone accounting tools, several tools can help provide you with an overview of your business cash flow and financial health. These can help you identify outstanding or unpaid invoices and locate oversights or glitches (perhaps a payment was lost in the mail). They can also help you recognize trends in customer relationships and places where you might need to apply or communicate stricter payment terms.

    When looking for an accounts receivable system for monitoring cash flow, consider one that:

    • Gives you regular access to accounts all in one place.
    • Tracks which accounts are outstanding and highlights payment trends.
    • Generates useful reports, such as an accounts receivable aging report, broken down by the number of days since the invoice was issued (0–30 days; 31–60 days; 61–90 days; more than 90 days, for example).
    • Provides you with your accounts receivable turnover (ART) ratio — how frequently your business collects its accounts receivable. A high ART ratio is an indication that your company is efficiently collecting funds, while a lower ratio means you may want to reassess your collection strategy.

    2. Know your customers

    It’s important to gain customers, but a customer who consistently pays late — or worse, not at all — may affect business cash flow and cost your business money and time. Collecting and maintaining accurate, up-to-date customer data in your billing and collection systems can aid business cash flow.

    Billing and collection systems can help you identify glitches or mistakes — an incorrectly entered email address might lead to a customer not receiving invoices, for instance. They’re also where you can update their payment histories, note the credit you’ve issued them or whether they are on a payment plan or list the limitations or freezes you’ve placed on their accounts for nonpayment, if necessary.

    3. Invoice promptly

    The first step in getting paid is to send an invoice. It seems easy enough, but small business owners are usually wearing multiple hats simultaneously, and invoicing takes time and money. Unfortunately, the longer it takes for you to invoice customers, the longer it takes for them to remit payment, which directly affects business cash flow.

    Getting invoices to customers sooner rather than later gives them more time to figure out their payment strategies or route payments internally for organizational approval, increasing the likelihood your cash flow remains steady.

    4. Clarify policies

    It’s important to ensure your accounts receivable policies are clear and readily understood by both customers and employees. Clarify your policies around due dates, terms of payment and late payment penalties. Next, ensure they are communicated clearly in invoices and other communications to both employees and customers. This keeps prompt repayment top of mind for customers.

    These efforts protect your business. Policies and attempts to acquire payment can act as records, should it be necessary to work with a collections agency.

    5. Automate accounts receivable

    Tracking payments manually or in a spreadsheet requires additional work and may result in a higher likelihood of mistakes. Fortunately, several applications and online platforms are available to automate your accounts receivable functions and increase the amount of cash coming into your business. They make it easier to create and send invoices on or within the platform, alert customers when an expected payment is overdue and even automate customer communications such as emails, text messages or phone calls informing customers about due dates or past-due dates.

    Using an online application is one way to save time, minimize errors and, ultimately, help increase your cash flow. Others include:

    • Using cash management tools: Banks and other financial institutions offer services for implementing electronic payment via an automated clearing house (ACH), providing a quick and convenient way for customers to pay upon receipt of the invoice. Many banks also offer a wholesale lockbox where customers can mail checks to post office boxes monitored by banks, which collect and deposit the checks quicker.
    • Offering diverse payment options: Make it easy for your customers to contribute to your bottom line by offering a range of payment options: cash, checks, credit and debit cards, online money transfers and digital payments. Need some ideas for helping customers pay more easily and quickly? Check out this article.
    • Switching to electronic billing: Electronic billing eliminates the time necessary for printing, mailing and delivering invoices, and some electronic billing systems allow customers to download invoices directly into their own accounting systems for immediate payment. Some business owners offer discounts to incentivize opting in to electronic payment systems and making swifter payments.
    • Outsourcing accounts receivable: If it’s in your budget, you may want to engage a licensed professional to manage accounts receivable, allowing you to maintain a cordial relationship with customers while your accountant or firm chases down outstanding invoices.

    6. Use a collections agency

    Involving a collections agency costs time, money and possibly something even more detrimental to your business — goodwill among customers. But it may be a necessary last resort after you’ve communicated with customers at every stage of the invoicing process, from gentle reminders about deadlines and penalties for late payments to discussions of payment plans (with deadlines clearly communicated) and warnings about potential legal action should the invoice remain unpaid.

    Need more insight? Speak with a business banker to find out how you can keep your business cash flow healthy and discover which business services may be right for your business.


    For informational/educational purposes only: The views expressed in this article may differ from those of other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

    JPMorgan Chase Bank, N.A. Member FDIC. ©2023 JPMorgan Chase & Co.


    What to read next