4 Ways to Conquer Major Accounts Receivable Challenges for SMBs


Accounts receivable is perhaps the most critical process for SMBs to conquer as its improper management could lead to unhealthy cash flows. There are several challenges that SMBs encounter during their accounts receivable process cycle such as: difficulty in matching payments to invoices, receiving late payments, rising Days Sales Outstanding (DSO), invoice delivery problems, customer resistance to electronic invoice adoption, customer attempts to extend terms, very limited payment methods and inaccurate and outdated information.

These challenges can be mitigated if SMBs take control of their accounts receivable process. However, they must understand and employ the right steps in the right way. Outlined below are some suggested steps to take:



  • 1. Improve Billing
    The first step towards reducing DSO for SMBs is to send out invoices on time. SMBs should invoice their customer immediately upon sale of the goods or services and must ensure to verify the customer’s billing address before sending out the invoice. If a manual process is still being used by the business, they should consider electronic invoicing so customers have more time to review and to pay their invoices before the due date.
  • 2. Offer a Wide Range of Payment Methods
    Offering only a cash method for receiving payments causes unnecessary delay in collecting payments. To overcome this, SMBs should give customers a wide range of payment options such as credit cards, bank transfers, debit cards and e-checks. This will enable their customers to select the one method that works best for them and will result in higher incidence of payments being received on time.


  • 3. Give Incentives
    Consider offering early payment incentives, such as a small discount, to those customers who pay early to encourage payment not only on time, but even early! SMB owners can easily offset this discount by speeding up the cash flow, creating savings on loan fees and getting similar or better discounts from their creditors.

The above mentioned methods are a great step for SMBs to take in overcoming their challenges associated with accounts receivable. However, they must be done diligently and on time to prevent major problems in the cash flow. Partnering with an outsourcing service provider can help ensure that the accounts receivable balance is kept within acceptable limits on an ongoing basis.

Whether an SMB owner faces an unmanageable financial reporting situation, needs guidance on tax planning, or is facing challenges in accounts receivable and accounts payable, Quatrro is committed to helping them overcome those hurdles through its cost-effective finance and accounting outsourcing solutions and wide range of other affordable business support services tailored specifically for SMBs.


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