Cash flow is the lifeblood of any business. While this statement may seem rather obvious, too many contractors will not address a slow payment until it is 45, 60, or even 90 days old. When an organization has too many slow-paying customers, perhaps it’s time to revamp - and tighten - credit policies. Listed below is a checklist of steps contractors can take to improve cash flow and reduce accounts receivable.

•  Bill on a regular schedule, such as monthly or bi-monthly. Alternatively, bill as soon as your work is done, while the value of your work is very apparent.

•  Make sure bills are addressed to the correct person.

•  Check your invoices for accuracy - errors provide an excuse for non-payment.

•  Institute a policy that spells out your expected payment terms and your internal procedures to handle slow-paying customers.

•  See that the policy has been circulated to all employees, including sales and marketing personnel.

•  Include a copy of your payment terms to new customers and request signed approval.

•  Perform credit checks on new customers by contacting credit rating services, analyzing recent financials, or checking credit references.

•  Segment your customer base into high- and low-risk customers. Devise a system to handle those customers differently.

•  Create and review a weekly accounts receivable update that lists slow-paying customers.

•  Establish clear trigger points that warn you when to turn a bill over to a collection expert and when to stop doing business with that customer.

•  Designate one person to handle accounts receivable. Supplement monthly statements with personal phone calls for follow up on problem accounts.

•  Know the collection laws for states/regions in which you operate. Most states allow you to collect interest on past due invoices.