Getting the money you’re owed for the work you’ve done is crucial to the long-term success of every small business. Yet some business owners don’t pay close enough attention to managing their receivables. This leads to late payments and delinquent accounts, which can impact your cash flow and wreak havoc on your firm’s liquidity. Many payment delays can be avoided, however, by developing an effective collections plan.

The importance of prompt collections can’t be underestimated. The longer you let delinquent accounts sit, the less likely it becomes that you will collect on them. According to the Commercial Collection Agency Association, nearly 27% of accounts that are three months past due will never be collected. That figure jumps to 44% after six months, and after a year, the probability of not collecting an overdue account hits nearly 75%. It’s no wonder that, by some estimates, one out of five small business failures is due primarily to bad debt.

The following features are designed to help you develop an effective collections strategy. Start off by assessing the effectiveness of your receivables policies, then use the valuable tips and resources we’ve provided to improve your chances of collecting what you’re owed:

How Effective Is Your Receivables Policy

Assess the effectiveness of your collections strategies and tactics with this brief quiz.

10 Steps to Effective Collections

Follow this step-by-step guide to collect from delinquent accounts.

Know the Collection Laws

Understand what collection practices are prohibited by federal and state regulations.

Avoid Delinquent Accounts

Take these actions to ensure that accounts don’t become overdue.

Effective Billing Practices

Make sure your bills don’t get in the way of collecting your payments.

How to Choose a Collection Agency

Use these tips to help you select a collection agency.