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Tips for Getting Paid Faster | Supporting Strategies


Managing Accounts Receivable for Prompt Payment


From reviewing your A/R aging each week to knowing how and when to follow up, these collection strategies will help you get paid.

Considering the importance of cash, it's surprising collections is one of the more neglected processes for businesses. It easily gets out of control if not managed consistently. Especially in the current environment, you need to have a systematic approach in place.

Here's how to manage your accounts receivable to ensure timely payments.

Know Your Cash Status
Like brushing your teeth, getting paid requires consistent effort to avoid unpleasant surprises. While tools are available to automate certain aspects, you still must devote time to compiling and reviewing transactions as well as confirming your records are up to date and accurate.

It all starts with billing. Your invoices should contain all required information to be paid (accurate descriptions, P.O. numbers, bank instructions, etc.) and be sent as soon as possible. Having any missing information and/or not following a client's procedure just delays payment.

Also, you should apply payments received in a timely manner. Nothing annoys clients more than following up on already-paid invoices. If clients pay by credit card, ACH or other means, verify payments were deposited as expected. Something may have prevented a payment from going through, such as an expired card.

From there, it's a matter of tracking where clients are in the payment cycle using the A/R aging report. Review and discuss each week with the appropriate people within your organization. A consistent review enables the discovery of trends and quick identification of clients struggling to pay. It also allows for the development of timely action plans for approaching each client. Is someone in your company better equipped to follow up? Is it a continuing client? Maybe scaling back or halting services is an option.

Determine a Timeline and a Method for Notifications
Notifying overdue clients is tricky and can lead to uncomfortable exchanges. It helps to have a systematic approach, following up at predetermined intervals with standardized and consistent messaging. Also, who the message comes from can have an impact. Want to send a gentle reminder? Have messages come from accounting or be system-generated. Need to escalate? Maybe the CFO or business owner should communicate directly.

If your payment terms are 30 days, set a reasonable schedule of, say, following up on the due date and again at 15 days if necessary. You can also send notifications before the due date. This helps to confirm your invoice was received and is in the process of being paid. It's also important to note your clients' policies and past behaviors. Do they consistently pay in 45 days versus 30? Is it a client that requires a reminder?

Document your process and keep track of all emails and phone calls. Log persons contacted and what was communicated. This helps track progress during your weekly reviews. You also need to think about escalation if the client still neglects to pay. Will you try a dunning letter? Will you enlist a collections agency?

Multiple Points of Contact
Establish multiple points of contact early on with every organization. At a minimum, get the direct contact information of the stakeholder and someone in the accounting department. That allows you take a top-down or bottom-up approach. Knowing the accounting contact can help you determine where bottlenecks are. They usually know the process best and are less sensitive to follow-ups and inquiries.

If your primary contact suddenly goes silent — whether it's because they are ignoring you, are on vacation or left the company — having multiple contacts also gives you options.

Try to Accommodate Clients
Collecting overdue invoices is stressful for everyone. Remember: The goal is getting paid. It's especially crucial to keep this in mind during events such as a pandemic, when a client's financial challenges may be temporary. Accommodating an overdue client until they're back on their feet creates a win for everybody.

For instance, develop a payment plan or offer alternative payment options. If you don't normally accept credit cards, consider it at times like these, as it provides clients extended payment terms but allows you to get paid immediately. A simple acknowledgement that you're willing to work with a client could result in an even stronger relationship in the long run.

George Stephen


George Stephen

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This website is created by Supporting Strategies to provide general bookkeeping and accounting information only. Supporting Strategies does not provide tax, legal or accounting advice, and the information contained herein is not intended to do so. As such, the information provided should not be used as a substitute for consultation with professional tax, legal, and accounting advisors, and you should consult with a tax, legal and accounting professional before engaging in any transaction.