Get Paid Faster & Easier with Accounts Receivable Process Flow Chart
- Cost Construction Accounting
- Apr 20, 2023
- 4 min read
Updated: 3 days ago
Every construction business owner knows cash flow is the key to profitability. Cash on hand is needed for contractors to keep their projects running, pay subcontractors on time, and seize new opportunities when they arise.
But poor management of accounts receivable (AR) can lead to late payments, bad debts, and unhappy customers. Even worse, inconsistent AR processes can put your business at risk of cash flow gaps that threaten project completion and company survival.
CCA understands the frustrations that come with receivables management. Our construction AR workflow can help you control your cash flow more effectively and get you paid quickly. In this guide, we'll walk you through our proven accounts receivable process flow chart a five-step system designed specifically for construction companies that want to get paid faster and stay in control.
What Is An Accounts Receivable Process Flow Chart?
An accounts receivable process flow chart is a step-by-step framework a construction company uses to document and manage how AR is handled from start to finish. Think of it as your roadmap for turning completed work into cash in the bank.
In the construction industry, AR management is more complex than most other businesses. You're dealing with progress billing, retention holdbacks, lien waivers, change orders, and multiple stakeholders on every project. Without a clear, documented process, money slips through the cracks, payment cycles stretch out, and your cash flow suffers.
A well-designed AR process flow chart ensures that every invoice gets created correctly, sent on time, followed up consistently, and collected efficiently. It transforms AR from a chaotic, reactive scramble into a predictable, proactive system.
Why Construction Companies Struggle With Accounts Receivable Management
Before we dive into the solution, let's talk about why AR is such a challenge for construction businesses:
Complex Billing Structures: Unlike retail or service businesses with simple invoicing, construction companies deal with progress billing based on percentage completion, time and materials billing, unit price contracts, and more. Each billing method requires different documentation and verification.
Retention Holdbacks: Most construction contracts include retention typically 5-10% of each invoice held back until project completion. This means you're constantly tracking two types of receivables: current amounts due and retention to be released later.
Lien Waiver Exchanges: Getting paid often requires exchanging conditional and unconditional lien waivers, adding another layer of paperwork and coordination to every payment cycle.
Multiple Payment Tiers: If you're a subcontractor, you're waiting for the general contractor to get paid by the owner before you see your money. This creates payment delays outside your control.
Change Order Documentation: Verbal change orders happen constantly on job sites, but if they're not properly documented and approved before invoicing, you'll face payment disputes.
Inconsistent Follow-Up: When your team is focused on field work and project delivery, AR follow-up often gets neglected until cash flow becomes critical by then, accounts are 60, 90, or even 120 days past due.
Are you tired of spending hours each week managing your accounts receivable? If AR is draining your time and resources, it's time to implement a structured process or shift the burden to experts who can handle it for you.
The CCA Accounts Receivable Process Flow Chart: 5 Steps to Get Paid Faster
Our accounts receivable workflow consists of five interconnected steps that work together to accelerate payment and eliminate common collection problems. Let's break down each step:
How CCA's Receivable Management Services Support Your AR Process
At Construction Cost Accounting, we don't just provide a process, we execute it for you with expertise built specifically for construction companies.
Trusted Bookkeeping Experience: Our team specializes in construction accounting, ensuring your AR data is recorded accurately and kept up-to-date. You get real-time visibility into who owes you money without spending hours managing spreadsheets.
Construction-Focused Expertise: We understand retention, lien waivers, progress billing, and the unique payment challenges of the construction industry. Our AR workflow is tailored to meet your specific needs, not generic accounting processes that don't fit construction.
Effective Approach: Our goal is simple keep your cash flow healthy and your customers happy. With our efficient solutions, you'll get paid faster, even while you're out in the field managing projects. Our streamlined approach means no more time-consuming invoicing or collections, just a steady stream of revenue flowing to your bank account.
Take Control of Your Construction Company's Cash Flow Today
As you can see, our accounts receivable process flow chart provides a proven framework to get paid quickly and put you back in charge of your cash flow. Accounts receivable can be challenging to manage, especially as your construction business grows and you take on more projects and customers.
The key to success lies in three principles: invoice promptly, follow up consistently, and track everything systematically. Whether you implement this process yourself or partner with CCA to handle it for you, having a documented AR workflow will transform your cash flow from unpredictable to reliable.
Don't let poor AR management hold your construction business back from the growth and profitability you deserve. Don't let another month go by watching your cash flow suffer while receivables pile up.
Contact CCA now to see how we can help your construction business thrive with professional accounts receivable management tailored specifically for contractors like you.
