Most small business cash flow problems are not really cash flow problems. They are collection problems wearing a disguise.
The good news is that debtor management responds extremely well to system and extremely badly to good intentions.
Start before the work
Agree the terms in writing before you begin. Not on the invoice, which the customer sees after you have already done the work. In the quote or the engagement, where they have to agree to it.
Take a deposit. For anything substantial. A customer who will not pay a deposit is telling you something useful very cheaply.
Do a credit check on large new commercial customers. It costs very little and the information is often striking.
Get the purchase order or approval process right up front. A large proportion of late payment in commercial work is not reluctance, it is that the invoice does not match a purchase order and it is sitting in someone's exception queue.
Invoice properly
Invoice immediately. Not at month end. The day the work is done. Every day you delay is a day added to the front of your payment cycle, and it is the cheapest improvement available.
Make the invoice easy to pay. Amount clearly stated, due date as a date rather than "30 days", bank details, and a card or payment link option. Businesses that only accept bank transfer are consistently paid slower.
Send it to the person who pays, not the person who ordered. These are often different people and the invoice frequently goes to the wrong one.
The follow up sequence
The key is that it is a sequence, it starts early, and it is the same every time.
Day minus 3. A short friendly reminder that the invoice falls due Friday. This is not chasing. It is a service, and it catches most of the invoices that were simply going to be forgotten.
Day 1 overdue. A polite email. Automated is fine.
Day 7. A phone call. Not an email. The phone call is the step everyone skips and it is the step that works.
Day 14. A more formal letter noting the terms and the consequences.
Day 30. Stop supplying, and mean it.
The single biggest predictor of whether you get paid on time is whether your customers believe you follow up. Not whether you actually do it once, whether they believe you always do.
The hard part
Most small business owners are reluctant to chase because the customer is a relationship and chasing feels like risking it.
Two things worth holding onto. A customer who takes 90 days is financing their business with your money, and doing it because you let them. And a relationship that cannot survive a polite phone call about an overdue invoice was not much of a relationship.
The businesses that get paid on time are not tougher. They are more consistent.
When to stop
There is a point where continuing to supply an account that is not paying is no longer a customer relationship but an unsecured loan you did not agree to make.
Set the threshold in advance, in writing, and apply it. Deciding in the moment, with a customer on the phone, is how a $4,000 exposure becomes a $22,000 one.
The book keeping side
You cannot manage what you cannot see. Aged debtors, reviewed weekly, is a five minute job in any accounting package and almost nobody does it.
If you do not know today which invoices are more than 30 days overdue and by how much, that is the first thing to fix.