Lack of cash to make payroll and pay bills is one of the most worrisome problems facing the small business owner. Often, the money has been earned and is in the business but isn't available to be used because it is tied up in accounts receivables.

Solve the that problem, and many other gut-wrenching worries will soon fade away. Here are three suggestions to do just that:First, good accounts-receivable management begins at the time the service is rendered or the product is purchased and delivered. Yet many times, especially among professionals such as doctors, dentists and lawyers, the service is rendered and the payment is either not discussed in advance or not discussed at all.

Also, some salespeople, as well as owners and professionals, make the fatal and revealing statement, "I love to sell, but I don't like to collect the money." That makes about as much sense as saying, "I like to eat but don't like to pay for the food." Try that line at the grocery checkout stand or with the cashier at the restaurant and see how far you get.

Second, if you are in an industry that delivers the product and traditionally invoices after the service is rendered, then systems must be put in place that require invoicing to take place immediately after the product or service is delivered.

Some tradespeople and small-business people are so busy performing the work and running a business that they consider it a nuisance to stop long enough to do the invoicing. A few months of running that kind of operation, and they won't have that problem anymore.

Third, in addition to timely invoicing and more organized invoicing, an effective follow-up by billing department personnel is vital to increasing cash flow. Your most organized clerical people should be in this department.

In addition to top performers, you need a collection system. The word system can be defined as a tool to Save Yourself Time, Energy and Money. If your customers are other businesspeople, I suggest you teach your people to find out who in the customer's accounts payable department is responsible for approving and paying bills and put this individual's name on the invoice. Then fax and mail the invoice to them.

After faxing the invoice, call the person on the phone and inquire if they received it. If they didn't, keep faxing it until receipt is acknowledged. Explain your credit terms to the person, rather than asking what their policies are about paying bills. Keep careful notes of all your conversations. Who did you talk to? What time and date did the conversations take place? And what was promised regarding the payment of the bill? Call five days before the invoice is due and make sure it is in the approved stack to be paid.

In my earlier business years, I remember being disappointed when I would call 15 days after the money was due, only to be told that the bill had never been received. This only happened a couple of times before I put a follow-up system in place.

What if you are doing timely invoicing, have your best people working in collections, follow the above system, and still have need of cash?

After looking carefully at your income statement, if it appears that you are on target with your budget, then you may need to either borrow against your accounts receivable from a bank or perhaps even go to a factor. The difference is in cost and involvement.

The bank will not usually cost as much as a factor but may not be willing to loan on your accounts receivables for a variety of reasons, ranging from the aging of the accounts receivable to the age of your business. If you can't borrow from these conventional sources, then your only choice may be a factor.

Factors actually purchase accounts receivable and immediately advance up to 80 percent of their face value. Unlike other lenders, factors actually take possession of the accounts and get involved in the collections.

Many entrepreneurs find factoring distasteful and a last-ditch effort. I personally agree, although some industries like textile and furniture manufacturers have used factors extensively for years.

Factoring is very costly, yet missed sales and payrolls are ultimately more expensive, since you may not be in business unless you do use a factor in a crisis. However, like any quick fix, factoring can become habit-forming and a real crutch. Better to get your accounts-receivable system down pat and your best people assigned to the task and, by all means, check their work.

Remember, your accounts receivables may be your most valuable asset and if properly handled can be an effective aid to better sleep at night and less-stressful days.