Working capital allows businesses to fund their expenses, inventory, payroll and other needs off of daily business. Collecting on accounts receivable typically can cover these working capital needs all on its own, if you’re collecting quickly and correctly. However, a recent report cited by The Washington Post is painting an unsettling picture of small businesses and their working capital needs.Dun and Bradstreet’s quarterly Private Capital Access Index, prepared by the credit data research firm in conjunction with Pepperdine University, showed that more small businesses are seeking financing since 2012. These small businesses stated that their reasons for seeking financing was working capital. This is up 22 percent since the second quarter of last year.

In addition to the need for financing for working capital, the report showed that almost a quarter of the small businesses analyzed stated that they have had a slow-down in their accounts receivable collections over the last three years. Many believe this will impede their ability to grow and limit their access to capital.

Facing a slow-down in accounts receivable collection is sure to impede growth. No matter how many new clients you bring in or deals you close, if you can’t actually collect on the cash this makes no difference. Collecting on accounts receivable allows your business to continue operating and making payments on your everyday expenses.

A few ways that we have discovered are helpful to collecting on accounts receivable are following accounts receivable best practices, creating a credit policy plan, creating a collection strategy and using collection letter and email templates. Check out all our whitepapers to help you collect more quickly here.