“We are having a hard time stabilizing our cash flow…

…We only take cash and checks and some of our customers pay us 3-5 weeks after we invoice them. Can you make some suggestions?”

The first thing I’m suggesting you do is contact a few of your good customers who pay late and find out why. There are several reasons why this might be happening: 1) They might be trying to pay bills on their own and their not keeping up with it. 2) They maybe having cash flow problems themselves. 3) They might not see your service as all that important to them and you’re getting paid last.

The fact that you only accept cash or checks tells me it’s probably #2. This means customers have to produce the cash before they can pay you. Based on today’s marketplace and consumer issues with purchasing, most are probably trying to keep up with their primary costs at best. Here’s some things you can do to resolve this:

1). Convert to credit card billings at the end of the month. You can still send invoices to let them know how much you billed. If you need help understanding how the merchant services industry works, I can help. I bill all my customers this way and I have zero cash flow problems.

2). If you still want to use the cash/check method, take a credit card when they sign up and let them know if invoices are not paid in 10 days, you automatically bill their cards.

3). Consider PayPal. It works like an online transfer from their bank to yours. They charge a fee for this. You can tell the client that if they pay as expected, they get a cash discount. If the pay period lapses, there’s a penalty.

4). When they sign up for your service, collect a down-payment of 2 times the monthly rate. Then compute a lesser charge for the remaining months. This will at least provide a cash account to work with.

Most customers will adhere to your payment policies if there are controls built in and explained up front. It sounds like you have little control over this because of the way you’ve set your pay guidelines up.

Steve Smith is a business coach who specializes in helping small businesses come up with a plan to succeed. To visit his site, click here.