Which factor can enhance cash flow from accounts receivable?

Prompt invoicing and follow-ups on overdue accounts are crucial practices that can significantly enhance cash flow from accounts receivable. When invoices are sent out immediately after a product or service is delivered, it accelerates the payment cycle, allowing the company to receive funds more quickly. Additionally, consistent follow-up on unpaid invoices reinforces the importance of timely payment for customers and reminds them of their obligations. This proactive approach helps in minimizing delays and reduces the likelihood of accounts becoming overdue, thus improving overall cash flow stability.

In contrast, longer payment terms might inadvertently extend the time it takes for customers to pay, negatively impacting cash flow. While higher product prices could increase revenue per sale, they do not directly influence the speed of payments from customers. Reducing the number of customers could limit potential sales and revenue, which may not improve cash flow and could instead deter overall business growth. Therefore, timely invoicing and diligent follow-ups represent the most effective strategy for enhancing cash flow from accounts receivable.