Stay on top of unpaid invoices, improve cash flow, and protect your customer relationships
Late payments are more than just a bookkeeping headache. They can disrupt your cash flow, strain customer relationships, and make it harder to plan. Whether you’re a small business owner or managing a larger operation, having a clear process for handling unpaid invoices can help keep your finances healthy and your business goals on track.
What Is DSO (Days Sales Outstanding)?
Days Sales Outstanding (DSO) measures the average number of days it takes your business to collect payment after making a sale.
- A lower DSO means you’re collecting payments quickly, keeping your cash flow strong.
- A higher DSO may signal payment delays that can restrict growth or increase borrowing needs.
Tracking DSO helps you identify where payments slow down — and what changes can bring your receivables back on schedule.
From numbers to stronger cash flow
Knowing your DSO is more than just tracking a number. It’s about understanding how quickly money moves into your business so you can spot slowdowns early, protect your cash flow, and keep operations running smoothly. With a clear view of your payment timelines, you can take informed steps to speed up collections without straining customer relationships.
Below are seven steps you can take to reduce delays, improve collections, and keep your revenue flowing.
1. Know Where You Stand
Regularly review your accounts receivable to understand your current payment timelines and identify patterns, such as certain customers or services that tend to pay late. Use this insight to set realistic improvement goals and track progress over time.
M&T Tip: M&T Direct Connect allows you to link your M&T accounts with Quicken® or QuickBooks®, giving you a clear view of incoming and outgoing payments in real time.
2. Be Selective About Extending Credit
Before offering payment terms, evaluate a customer’s ability to pay on time. Create clear credit guidelines and ensure your team follows them consistently. For clients who need flexibility, consider tools that allow secure payment plans or recurring payments through M&T Bank’s Merchant Services, helping you balance risk while maintaining good relationships.
3. Make Payment Terms Crystal Clear
Confusion often causes unnecessary delays. Clearly outline payment deadlines, accepted methods, and penalties for late payments. Consider offering small discounts for early payments or requiring deposits for large projects.
M&T Tip: Merchant Services allows you to provide multiple digital payment options — so customers can pay quickly and securely via card, ACH, or mobile wallet. The faster they pay, the stronger your cash flow.
4. Streamline Your Invoicing Process
Errors or missing details can delay payment cycles. Audit your invoicing process to ensure every invoice is accurate, complete, and delivered to the right contact the first time. With Merchant Services you can create and send professional digital invoices, track payment status, and eliminate the delays of paper billing — no more waiting for checks or worrying about mail delays.
5. Follow Up With Confidence
Sending an invoice is just the beginning. Develop a follow-up schedule to remind customers of upcoming or overdue payments. Stay polite but consistent. If a client is struggling, offer structured payment plans to keep the relationship positive while keeping money moving. Use M&T’s digital payment tracking tools to monitor progress and automate reminders, making follow-ups smoother and less time-consuming.
6. Keep Up the Momentum
Improving your receivables process takes consistency. Make reviewing outstanding invoices part of your regular financial check-ins.
M&T’s Merchant Services includes mobile payment tools backed by fraud protection and data security — helping you receive funds safely, wherever your business happens. Moving away from manual checks eliminates the “invoice → mail → wait → deposit” cycle and reduces check fraud risk.
7. Make It Easy to Pay You
The easier it is for customers to pay, the faster you’ll see funds in your account. Offer multiple payment options — credit card, ACH, mobile wallet, or online portal — and clearly communicate those options on your invoices and website.
With Merchant Services, you can securely accept payments across channels — online, in person, or on the go — while getting deposits quickly and minimizing the chance of fraud.
Bottom Line
A proactive approach to managing late payments can help you get paid faster, maintain strong relationships, and protect your business from cash flow disruption.
M&T Bank’s Merchant Services and digital business tools provide a faster, safer way to collect payments, helping you eliminate paper checks, reduce fraud exposure, and improve cash flow with every transaction.
- Visit the Business Education Portal for more ways to strengthen your financial operations
- Learn about Business Checking and Cash Management options to keep your operations running smoothly
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M&T Bank Merchant Services® are available subject to completion of a Merchant Services application and credit approval. Merchant Services are provided subject to the terms and conditions of M&T Bank's Merchant Services Agreement. Availability of funds is subject to M&T Bank's Funds Availability Policy. Additional terms and conditions apply.
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This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. Please consult with the professionals of your choice to discuss your situation.