10 ways to accelerate cash flow in December without disrupting customer relationships
10 ways to accelerate cash flow in December without disrupting customer relationships
December is one of the most financially strained months for businesses when it comes to cash flow. Year-end project surges, holiday closures, and fiscal budgeting cycles can create long wait times between delivering work and receiving payment. Many companies might feel stuck between needing cash flow immediately and not wanting their customers to feel alienated by aggressive tactics.
Luckily, accelerating cash flow collections doesn’t require hard-line approaches or threats. Instead, the strongest strategies focus on enhancing operational efficiency, transparency, and alignment with how customers currently pay. Gateway Commercial Finance, an invoice factoring company, has put together 10 proven tactics, pulling from trusted sources, including Stripe, Cadex, Resolve Pay, and more, to help you strengthen client trust, retention, and satisfaction.
The 10 tactics to increase cash flow collection
By employing the following 10 tactics, you can reduce the cash flow squeeze your business may ordinarily see during December.
1. Invoice batching cadence
Consider shifting from monthly or milestone-based billing to weekly invoice batching in order to shorten the window between work completion and payment requests. Companies that made the switch from twice-monthly to weekly cycles noted increased collection speed, according to data gathered by Cadex Solutions, by catching more accounts payable payment runs. The metric to track most with this tactic will be the average time from work completion to invoice sent.
2. Progress billing activation
Consider converting any remaining December projects from milestone billing to monthly progress invoicing. Bill for completed portions instead of waiting for full phase delivery. Based on Stripe’s Progress Invoicing Guide, progress invoicing can offer businesses a consistent revenue stream and help match payments to work completed. Your organization should track the percentage of projects using progress billing versus milestone billing, and set a target of around 80% or above for the former.
3. ‘Deliverables accepted’ confirmations
Think about formalizing approval triggers so that invoices go out immediately when a client signs off on work. Doing so can leverage the momentum of demonstrated value and also eliminate delays that may otherwise be caused by internal processing gaps. To implement this tactic, start by monitoring the time from approval to invoices sent that your business has during December.
4. Small-balance invoice sweeps
Consider a strategy of batch-sending all invoices under $500-$1,000 with simplified payment terms, as small balances are often approved faster with less scrutiny. Small-balance invoices typically bypass complex approval hierarchies and can be processed by accounts payable staff without executive sign-off, making them an effective method for collection. Examine your collection rates on invoices under $1,000 within 14 days, ideally with a target range above 75%.
5. Holiday billing cutoff terms
Communicate December-specific cutoff dates for when clients must approve invoices to ensure you receive payment before the end of the year. Many organizations have accelerated approval processes before holiday closures to clear budgets and reduce carryover, and knowing when your business’s cut-off date is will help customers be on time. Clear communication is always the best strategy.
6. Partial progress billing
Think about billing for portions of incomplete projects using a percentage-of-completion method, particularly for long-term engagements that could extend into Q1. Partial payments create predictable cash flow patterns and reduce the risk of large unpaid balances, with over 30% of B2B transactions now involving partial payments according to ResolvePay data. To employ this tactic, monitor the number of partial invoices issued compared to full invoices with a target of 40% or above for any projects over $10,000.
7. Early payment discount push
Offering 2/10, Net 30 terms (a 2% discount if paid within 10 days) specifically for December invoices can help to incentivize faster payment. A 2% discount for paying 20 days early represents an annualized return of 36.7% when multiplied out, which can make it highly attractive for clients with available cash.
8. Ship-complete vs. ship-partial policy review
Consider temporarily adjusting shipping policies to allow partial fulfillment and invoicing rather than waiting for complete orders, especially for items on backorder. This strategy works well because partial shipments allow faster access to essential items and enable invoicing for delivered portions rather than delaying all revenue until full order completion. Revenue recognized from partial shipments compared to delayed complete orders is the main metric to track to measure the success of this tactic.
9. Retainer acceleration
Another option is to request clients to pre-fund January retainers in December in order to take advantage of remaining budget allocations before year-end resets happen. Retainers can create predictable cash flow, and many clients could prefer spending some of their remaining budget rather than losing it in calendar-year fiscal resets.
10. Aging report prioritization
Finally, run accounts receivable aging reports weekly in December and prioritize collection calls for invoices in the 31-60 day bucket before they age further. The probability of collecting past-due amounts is naturally much stronger at 30-60 days than after 90 days.
Cash flow acceleration is about clarity and convenience
Improving cash flow doesn’t require aggressive collection calls or damaged relationships. The most effective strategies for bolstering your cash flow will simply help customers pay faster by removing friction, increasing transparency, and aligning with billing rhythms that already exist for them. Many of the suggestions above may require agreement with your customers up-front, baked in during the proposal, contract or purchase order stage. By implementing even a few of these strategies, your organization can materially strengthen December revenue, reduce year-end financial stress, and set up a more stable entrance into Q1.
This story was produced by Gateway Commercial Finance and reviewed and distributed by Stacker.
