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Time is money, and when it comes to collecting past-due invoices, more time means less money. In fact, according to the Commercial Law League of America, at 90 days past due, 75% of invoices are paid; at 120 days, that number drops to about 50%.

“Staying on top of collections makes a difference when payments are late, but it also pays to think about the issue in terms of the time value of money,” says Mary Schaeffer, accounts payable expert and author of Essentials of Credit, Collections and Accounts Receivable, Accounts Payable Best Practices and several other books on the subject. “That is, the sooner you have your money, the quicker you can invest it in the business, put it in a fund or make it work for you in some other way.”

To make your collections as effective as possible, Schaeffer recommends two key strategies. First, train your customers to pay from the start. As far as that training is concerned, she says that it starts with the first invoice you ever send out. Rather than including terms like “Net 30 Days,” you should put a clear date as to when payment is due, along with a date when past-due charges will be incurred as well as what the past-due charges are.

Second, don’t be afraid to be the “squeaky wheel.” “If cash is tight and people have to choose who they’ll pay first, it’ll usually be the person that gives them the hardest time, so don’t be afraid to be aggressive with past-due invoices,” she advises. “If you’re easygoing and give people breaks, you’ll always end up being delayed. It’s not about being liked. This is business.”

In theory, the collections process begins the first day an invoice is late. “But it doesn’t really work that way,” says Schaeffer. “On a practical basis, you want to give people between 15 and 30 days as a grace period. But if you wait longer than that, it becomes tougher to get your money. The best technique is to automatically follow up 30 days after an invoice is sent.”

If you have a handful of very large invoices every month, Schaeffer advises calling or e-mailing those customers a few days before the due date to ensure that they’ve received the invoice and that they’ll have no issues with payment. “If the customer typically pays on time, then you don’t have to make the call, but if you have late payers, don’t hesitate to make the early call,” she observes. “Eventually, they’ll want to avoid hearing from you and become good payers.”

Also, if a customer who has a cash flow problem makes a promise to make a partial payment, document the promise and follow up on those dates immediately. The customer needs to know that, should they miss a date, you’ll be on the phone immediately.

Schaeffer notes that you can develop your own set of standard collections letters, but, over time, customers who are chronically late in paying will begin to recognize them and wait for your final demand letter before they pay.

If you can’t collect at all? Generally, past-due accounts are sent to collection agencies after 120 to 180 days, Schaeffer says. “Bear in mind that collection agency costs are typically 25% to 30% of the value of the invoice,” she says. “It may sound expensive, but when you take into account the trouble you’ve had collecting on the invoices, coupled with the fact that the agencies are better at it than you are, getting 70% to 75% of the value is better than none. Remember, if you do send an account to an agency, it means you’re probably not going to do business with that company or person again. You may have made that decision anyway, but it’s a relationship ender.”

At the end of the day, winning at the collections game is all about “being persistent, consistent and following up no matter what, especially when promises are made,” says Schaeffer. “Don’t be afraid to be the squeaky wheel—it’s the one that gets the grease.”