Many businesses struggle not because they can’t generate sales, but because they don’t manage cash. There is nothing more important to the success of your business than your system for managing cash due from sales through your process of billing and collections. You can have lots of customers, but if you don’t collect money from them, you will go out of business. For your business to get paid efficiently, you need to establish several things, including payment methods and payment terms, billing and collections.

“The more different types of payment you accept, the more helpful it will be for customers.” 

Before you sign on your first customer, you need to have established your policies and procedures for these items. This policy should cover your credit policies, accepted methods of payment, interest charges, etc. You should also establish clear billing policies, including billing terms and billing frequency. How will people pay you? This depends primarily on the type of business and whether your customers are individuals or companies or both. There are some established ways to take in money from customers of all types:

• Cash. Cash payment such as from individuals in a retail business
• Checks. Checks from individuals and business customers
• Credit/Debit Cards. Credit and debit card payments from individuals and businesses
• PayPal. Online payment methods such as PayPal, from individuals and businesses.

The more different types of payments you accept, the more helpful it will be for customers. But you will have to pay a premium for handling some types of payments, such as credit and debit cards (which take 1-4 percent of each transaction. Your collection process is an essential piece of your financial equation. If you don’t keep up with your receivables, you’re putting your business at risk. But an established and consistent collection process will help you to avoid a cash-flow situation.