Why Collections Are Crucial for B2B SMEs 3

For small and medium-sized B2B businesses — especially those without a CFO — collections often get treated as an afterthought. The focus is on selling, delivering, and keeping customers happy, with the assumption that payments will arrive on time. But the truth is stark: 82% of small businesses fail due to cash flow problems, and late or unpaid invoices are a major driver.

#Why Collections Matter for SMEs

Cash flow is the lifeblood of your business. Outstanding invoices are essentially interest-free loans you've given to your customers. In the UK, 56% of small businesses are owed money on unpaid invoices — averaging $17,500 per business. That's money sitting in someone else's account instead of fueling your operations.

When collections lag:

• Payroll and rent become harder to cover
• Growth plans get delayed
• Supplier relationships can suffer
• Your risk of needing expensive credit rises

In Europe, 25% of business bankruptcies are linked to late payments. In other words, a sale isn't really a sale until the money hits your bank.

#The Hidden Costs of Weak Collections

SMEs without a CFO often rely on ad-hoc, manual follow-ups. That leads to:

• Inconsistent payment reminders
• Long Days Sales Outstanding (DSO)
• Owners spending 10% of their workday chasing payments
• Customers learning they can pay late without consequence

High DSO ties up working capital and limits your ability to invest in growth. Every day an invoice goes unpaid is a day your cash flow is under pressure.

#How to Improve Your Collections

Here are practical steps any SME can take — even without a dedicated finance department:

1. Set clear payment terms – Net 30, early-pay discounts, and late fees should be on every invoice.
2. Invoice promptly and accurately – Send invoices as soon as the work is done; mistakes cause delays.
3. Follow a structured reminder schedule – Pre-due reminders, due-date nudges, and consistent post-due follow-ups.
4. Offer multiple payment methods – Bank transfer, card, online portal.
5. Track your metrics – Watch DSO and aging reports to spot chronic late payers.
6. Use incentives and penalties – Reward prompt payments, apply fair late fees.
7. Automate where possible – AR software can handle reminders and escalation so nothing slips.

#Final Thoughts

Healthy collections mean healthy cash flow — and that's what keeps your business alive and growing. Don't wait for a crisis to tighten your process. Treat collections as a strategic priority, not an afterthought.

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Ledgvero helps SMEs like yours get paid faster. Our AI-powered receivables platform automates reminders, follow-ups, and escalations across email and SMS, reducing DSO and freeing your team from chasing payments. Learn how Ledgvero can improve your collections and keep your cash flow strong.