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Top 8 Tips for Contractors to Improve Accounts Receivable Collections

Updated: May 18

Good accounts receivable management is one of the best ways to get paid quickly. But sometimes, customers don't pay their bills on time, which can be frustrating. Late or unpaid invoices can cause cash flow issues and strain customer relationships. That is why you need to have a solid strategy in place to make your collection efforts count.

In this blog, we will provide you with the top 8 ways to improve your accounts receivable collection process. By following these strategies, you'll be able to collect debts owed to your company efficiently.

accounts receivable collections

What Are Accounts Receivable Collections?

First, let's define what "accounts receivable collections" means. It is the process of collecting debts owed to your company by customers who haven't paid for the work you completed for them. Without proper management, you risk not having enough cash to keep your project running.

Don't let past-due accounts receivable hinder your business's growth. Make sure you have a solid strategy in place to manage your accounts receivable collections and get paid what you're owed!

Top 8 Accounts Receivable Collection Techniques:

1. Create an Accounts Receivable Aging Report:

An AR Aging Report is a critical collection tool for tracking unpaid payments. It lists your invoices based on date ranges, allowing you to see which invoices are overdue and how far behind they are to require immediate attention. With an AR aging report, you can easily identify late-paying customers and analyze how they are paying you.

receivable collection process

2. Automate Your AR Workflow

AR process automation saves time and reduces data entry mistakes. You can use accounting software to automate tasks like creating invoices, sending payment reminders, and recording payments. This can help you simplify the way you collect AR and make sure that all tasks are done correctly and on time.

With CCA's AR workflow in place, you can track balances and better monitor when customers need to pay their invoices.

3. Follow Up on Overdue Payments

The longer debts go unpaid, the less likely it is that they will be recovered in the future. For that reason, the sooner you are aware of any past-due invoices and act on them, the better. Make sure you reach out as soon as possible to let them know about the due dates and penalties. Then help them get back on track with their payments.

4. Be Flexible With Payment Plans