The squeaky wheel gets the grease - KAF is the Squeaky Wheel!

What to do: Assign someone for your organizations to track your billing. Then put a process in place for issuing a second invoice, making a phone call and perhaps levying penalties such as extra fees at certain deadlines.

"You want to have a plan for what happens if they're 30, 60 or 90 days late," Katie says.

Some entrepreneurs believe that once they've sent out an invoice, they've taken care of billing. “Not so, Every late payment is an interest-free loan and hurts your cash flow."

Cash-Based or Accrual-Based Accounting

When you use the cash method, you count income when you receive it and expenses when you pay them. Under the accrual method, you count income and expenses when they happen.

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In practical terms, this difference in timing is relevant if your company keeps inventory on hand or handles transactions on credit. In these cases, the accrual method might be a better choice for your business. And in fact, if your firm has more than $5 million in sales or keeps an inventory, the IRS might require that you use the accrual system. In other cases, however, the simpler cash system could be all you need.

It’s Easy to be on Autopilot - That's when things go wrong.

It’s easy to be on autopilot when you’re writing checks and tossing canceled ones into a filing cabinet without reviewing them. Remember: Those checks are as good as cash. And if something goes wrong, you — not the bank — will be on the hook.

Take the same care with checks as you would with cash. Sign checks using a clear, distinctive signature that isn't easily forged. Review canceled checks frequently, online and in your office. Secure privacy so that way you can catch unauthorized checks. And if your business is a partnership, it’s a good idea to have at least one of the partners co-sign the checks to eliminate any confusion. - We can help with this policy.

Have a system that allows you to quickly and easily retrace your company’s financial activities

Your record keeping will be more effective if you have a system that allows you to quickly retrace your company’s financial activities. This means keeping your invoices and checks in numeric order, not skipping check or invoice numbers, and keeping separate bank accounts for your business and personal funds. If you can’t go back a year and reconstruct your company’s finances, you probably aren’t leaving an effective audit trail.