Monthly AR Review Checklist for Construction Finance Teams
Cost Construction Accounting- Apr 28
- 4 min read
Managing accounts receivable (AR) in construction is more than just chasing payments; it's also about safeguarding your cash flow, maintaining strong client relationships, and keeping your business running smoothly. As a seasoned bookkeeper who specializes in construction finance, I've witnessed directly how a well-structured Monthly AR review checklist can make or break a company's financial health.
In this tutorial, I'll walk you through a realistic, simple checklist that your construction finance team may utilize every month. Whether you manage your own books or have a small team handling your money, this article is full of practical information, simple methods, and clever solutions.
Why Monthly AR Reviews Matter for Companies
Payment delays, complicated billing, and cash flow problems are common in construction jobs. By using a Monthly AR review plan, you stay ahead of problems instead of being caught off guard. You can find problems early, talk to clients in a professional way, and make plans for future costs.
Imagine that you finish a big job and find out weeks later that the client still hasn't paid. You didn't follow up with them. Now it's hard for you to pay your employees and vendors. With an AR review, you won't get into these tough spots.
What Should Be on Your Monthly AR Review Checklist?
Here’s a simple but effective checklist you can start using today:
Monthly AR Review Item | Why It Matters |
Run the AR Aging Report | Identify which invoices are past due |
Review Retainage Receivables | Track amounts being held until project close |
Verify Billing Accuracy | Prevent disputes from underbilling/overbilling |
Confirm Lien Rights Deadlines | Protect your right to file liens if unpaid |
Communicate with Clients on Past Dues | Friendly reminders keep collections moving |
Analyze Payment Terms and Cash Flow Impact | Adjust terms if needed for future jobs |
Forecast Expected Collections | Plan cash needs based on realistic inflows |
The Ultimate Monthly AR Review Checklist
Here’s a detailed checklist your construction finance team should be using each month:
1. Review AR Aging Report
First, get your AR aging study. This list shows how long each bill has been past due, generally divided into groups of 0–30 days, 31–60 days, 61–90 days, and over 90 days.
Invoice Age | Action Step |
0–30 Days | Friendly reminder or confirmation of receipt |
31–60 Days | Firm but courteous follow-up |
61–90 Days | Escalate to management or collections |
Over 90 Days | Consider legal action or settlements |
Pay close attention to invoices aging past 60 days—these are red flags for potential bad debt.
2. Prioritize High-Value Invoices
Not all bills that are past due are the same. Sort your list by how much is owed, and make sure you pay the most important debts first. Big-ticket items have a bigger effect on your cash flow control than small ones.
3. Double-Check Construction Invoicing Accuracy
Things move more slowly when there are mistakes. Before calling a client to remind them of an unpaid bill, make sure:
The right amount to bill for
Supporting papers (contracts, change orders) that are properly attached
It's easy to understand how to pay.
Making a construction billing checklist cuts down on unnecessary emails with clients and speeds up payment.
4. Communicate Clearly and Professionally
When you follow up on outstanding payments:
Stay polite but firm
Reference invoice numbers and amounts
Offer payment options if possible
Good communication keeps client relationships strong while still emphasizing the importance of timely payments.
5. Set Up Internal AR Procedures for Construction
Consistency is key. Your finance team should have clear AR procedures for construction projects, including:
When to send first reminders
Escalation process for overdue accounts
How to handle disputed invoices
Creating a system helps avoid missed follow-ups and ensures nothing slips through the cracks.
6. Track Collections and Update Notes
Always document your follow-up efforts. Keep a record of:
Calls made
Emails sent
Client responses
Promised payment dates
An organized tracking system will help you review progress easily during your next Monthly AR review checklist session.
Simple Best Practices to Improve AR Management
Use a real AR review plan every single month.
Choose a specific AR contact person, like a cashier or an administrator.
Put due dates on your calendar to be reminded of them.
If you can, set up automatic alerts.
Talk about how to pay for the work before it starts.
These habits will help your cash flow, make you less stressed, and cut down on bad loans.
How Construction Cost Accounting Can Support You
We know it's hard to keep up with invoices when you're busy with other things, like handling multiple projects or growing your business.
Using a construction accounting checklist like the one we talked about above, you can make your own method. You could work with professionals who know everything there is to know about building finance management, though, if you want a smoother, more professional process and more time back in your day.
We at Construction Cost Accounting are experts at keeping the books for companies like you in the construction industry. We review your accounts receivable every month, keep track of lien due dates, send you polished reports, and help you improve your cash flow, so you can focus on running jobs instead of numbers. Come on, we want to help you keep your business going strong!
Conclusion
The AR review you do every month is more than just papers; it's a powerful way to keep your business safe. Making a clear list and following a consistent process will help you keep track of your receivables, improve your cash flow, and make your construction company stronger and more adaptable.
Start out small. Stay the same. As always, know that Construction Cost Accounting is here to help you when you need it.
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