When customers pay their invoices late, it can quickly become a problem for small and medium-sized enterprises. Because while outstanding invoices wait to be settled, wages, rent and supplier invoices keep coming due. Good receivables management helps SMEs avoid payment defaults, pursue outstanding claims consistently and safeguard their own liquidity. But what can a company do when customers do not pay on time? And how can financial bottlenecks be bridged?
What is receivables management and why does it matter?
Receivables management covers all the measures a company uses to manage its outstanding customer invoices and ensure they are paid on time. This includes invoicing, monitoring incoming payments, the dunning process and, where necessary, further steps to collect outstanding amounts.
For SMEs, effective receivables management is particularly important. They often have to buy materials, pay employees or pre-finance orders before their customers settle the corresponding invoices. If incoming payments are delayed, available cash can become tight even when the order books are full.
The principle applies: a company can be economically successful and still run into a liquidity bottleneck. What matters is not only how much revenue it generates, but also when the money actually arrives in the account.
Why do customers pay their invoices late?
Late payments have different causes. Some customers overlook an invoice or have internal processes that delay the payment run. Others are in financial difficulty themselves and cannot settle their invoices on time.
That is why it is important for SMEs to identify the reasons as early as possible. A friendly enquiry can already help if an invoice has accidentally been set aside. In the case of repeated delays or concrete payment difficulties, however, clear arrangements and closer monitoring make sense.
Whatever the reason, companies should not simply wait for outstanding invoices. The earlier they react, the sooner they can find a solution together with the customer and limit the risk of a payment default.
5 measures for effective receivables management
With clear processes, SMEs can reduce late payments and plan their liquidity more reliably.
1. Issue invoices quickly and correctly
The first step begins right after the sale or the service rendered. Issue invoices as promptly as possible and make sure all the important details are included. In particular, this means the correct customer details, a comprehensible description of the service, the invoice amount and the payment term.
The easier an invoice is to check and to pay, the lower the risk of unnecessary delays. Also agree clear payment deadlines and communicate them as early as when the order is placed.
2. Monitor incoming payments regularly
Keep track of all outstanding invoices. An up-to-date receivables list shows which amounts are still open and which payment deadlines have already passed.
An overview sorted by due date is especially helpful. It shows at a glance which invoices should be paid soon and which ones require action on your part.
Simple accounting software or a well-maintained spreadsheet can be enough for this. What matters is that the overview is updated regularly and that responsibilities are clearly assigned.
3. Follow up early and politely
If an invoice is overdue, it is advisable to get in touch promptly. First check whether the invoice reached the customer and whether there are any open questions. Often the issue can be resolved with a short email or a phone call.
If payment still does not arrive, a written reminder follows, clearly referring to the outstanding invoice and setting a reasonable payment deadline. Document your attempts to make contact and record which arrangements were agreed.
The legal starting position matters: if a payment date has been bindingly agreed, the customer can generally fall into default once it passes. If no specific date was agreed, a reminder is usually required. Review the specific contractual terms before initiating further legal steps.
4. Define clear rules for customers in arrears
If an invoice remains unpaid despite a reminder, you should not leave the next steps to chance. Define internally when a further reminder is sent, when a personal conversation makes sense and from what point legal steps are considered.
If the customer is in financial difficulty, payment in instalments can be an option. The prerequisite is that the arrangement is realistic and recorded in writing.
Under certain legal conditions, outstanding claims can be pursued through debt enforcement proceedings. Beforehand, companies should carefully review the claim, its due date and any objections raised by the customer.
5. Plan your own liquidity on an ongoing basis
Good receivables management does not end with monitoring outstanding invoices. Equally important is the question of how delayed incoming payments affect your own finances.
Compare expected income with upcoming expenses. Also take into account invoices whose payment may be delayed. This way you recognise early on whether money could be missing for wages, suppliers or other ongoing costs.
The sooner a potential bottleneck becomes visible, the more time remains to adjust expenses, discuss payment terms with suppliers or examine a suitable form of financing.
What to do when outstanding invoices strain liquidity
Despite good preparation, late payments cannot always be avoided. It becomes particularly difficult when several customers are in arrears at the same time and important expenses fall due regardless.
An example: a craft business has completed several orders and issued its invoices. The customers, however, pay later than agreed. At the same time, the business has to buy materials for new orders and pay the monthly wages. The money from the completed orders is expected, but is not yet available.
In such a situation, short-term financing can help bridge the time until the payment actually arrives. The prerequisite is that the financing suits the company's financial situation and that repayment can be planned realistically.
The Kamuno SME credit: one possible solution for liquidity bottlenecks
For situations like these, the Kamuno SME credit can be an option. Kamuno offers Swiss SMEs a flexible credit line that can be used, among other things, to bridge short-term liquidity bottlenecks.
Companies can apply for a credit line and draw on the approved amount as needed. At Kamuno, a payout of the entire credit line or a partial payout of at least 50 percent is generally possible. The remaining amount can serve as a reserve.
One key point: interest and fees apply only to the amount actually used. Companies should review the specific costs against the current fee overview before signing.
The digital application process allows for an initial, non-binding assessment online. Kamuno then reviews the request and the company's financial situation.
It is important to note that a credit does not replace an outstanding invoice and does not prevent a payment default. It can only help to bridge the time until payment arrives financially. Companies should therefore always check whether they can carry the cost of the credit and how repayment will work. Where payments fail to arrive permanently or there are structural financial problems, additional measures are needed.
More information on the Kamuno SME credit
Securing financial flexibility with a clear approach
In summary: effective receivables management helps SMEs keep outstanding invoices under control and identify payment defaults as early as possible. The decisive factors are prompt invoicing, regular monitoring of incoming payments and a consistent dunning process. Complemented by forward-looking liquidity planning, financial bottlenecks can often be spotted early.
If customers still pay late, companies can additionally examine suitable financing options. A flexible Kamuno SME credit can help bridge short-term bottlenecks and continue to meet ongoing obligations.
Anyone who actively manages outstanding claims and keeps an eye on their liquidity creates an important foundation for stable business operations – even when customer payments keep them waiting.