Imagine this scenario: A growing small business lands its biggest client yet, but three months later, they’re struggling to pay their own bills. Why? The invoices they sent were delayed, incomplete, and went unnoticed until their client finally disputed them. This chain reaction—missed payments, strained cash flow, and mounting late fees—is more common than you’d think.
Your accounts receivable (AR) process might be costing you more than you realize—are you leaving money on the table?
Accounts receivable isn’t just about sending invoices and collecting payments; it’s the lifeline of your cash flow and the foundation of your financial stability. Even small errors—like a misplaced invoice or inconsistent follow-ups—can snowball into bigger financial headaches, draining resources and stifling growth.
Mistake #1: Delayed Invoicing
Why It’s a Problem:
Think about it: the longer you wait to send an invoice, the longer you’ll wait to get paid. It’s as simple as that. Late invoicing doesn’t just push payment deadlines—it creates cash flow headaches. Bills pile up, vendor payments get delayed, and you end up juggling resources just to stay afloat.
And let’s be real: clients aren’t in a rush to pay an invoice that lands weeks after the work was done. It makes you look unorganized and makes them feel like paying you isn’t a priority.
Take this example: A marketing agency wraps up a big project but waits two weeks to send the invoice. By the time the client gets it, their budget for the month is already allocated, and payment is delayed another 30 days. Suddenly, the agency is chasing payments while struggling to pay their own team on time.
Quick Fix:
Make invoicing a part of your process, not an afterthought. The easiest way? Automate it. AR tools can instantly generate and send invoices the moment a project is complete or a product is delivered. They can also handle recurring billing, saving you the hassle of remembering when to send what.
Another tip: Set a strict billing schedule. Whether it’s sending invoices immediately after completion or on a weekly cycle, having a routine keeps things predictable. Automation doesn’t just save time—it helps you get paid faster and keeps your cash flow steady.
The investor approach to marketing
During challenging economic times, marketing leaders often respond to cost-cutting directives by implementing uniform reductions across various marketing channels, such as a 10 percent cut from each area. Many believe they can manage such measures by simply spending less. While they may be confident about their ability to achieve savings, they are less assured when it comes to driving growth. According to our December survey, two out of three respondents expressed apprehension about simultaneously reducing spending and outperforming competitors.
However, there is a viable path forward. Instead of solely focusing on substantial and indiscriminate budget cuts, companies can adopt an investor mindset and take a more nuanced approach to their marketing investments. This approach involves identifying areas of overspending and reducing expenses where necessary, while simultaneously allocating additional resources to initiatives that offer greater potential for long-term return on investment (ROI). By eliminating inefficient spending, successful companies can potentially achieve savings ranging from 10 to 20 percent. These savings can then be reinvested in more efficient efforts and targeted campaigns, aiming to drive growth in the range of 5 to 10 percent.
This strategic reallocation of resources can help companies create a significant competitive advantage.
“While it’s tempting to pull back, we believe that companies that double down on growth will not only rebound faster but will also emerge stronger as a result. “
Mistake #2: Lack of Payment Follow-Ups
Why It’s a Problem:
Not chasing overdue payments may seem harmless, but it can quickly snowball. Late payments disrupt your cash flow, making it harder to manage expenses and plan for growth. On top of that, it can send the wrong message to your clients—that you’re not paying attention or that timely payments don’t matter.
Without consistent follow-ups, overdue accounts can pile up, adding unnecessary stress and creating financial uncertainty for your business. It’s a small mistake with big consequences.
Quick Fix:
The good news? Setting up a solid follow-up system doesn’t have to be complicated. Here’s how you can make it work:
- Automate Reminders: Use tools to send friendly payment reminders before the due date, on the due date, and at regular intervals afterward. This ensures clients are aware of what’s owed without you having to remember every invoice.
- Create an Escalation Process: Not all clients will respond to initial reminders. Set clear steps for escalating overdue payments, like moving to a more formal tone after 15 days or involving a senior contact after 30 days.
- Keep It Polite and Professional: Payment follow-ups don’t have to be awkward. A respectful nudge can often do the trick. Use language that’s firm but understanding to maintain a positive relationship.