Accounts receivable workflow for small teams

Seven steps, one owner, one weekly slot: agree terms before the work, invoice the day you deliver, reconcile weekly, chase on a fixed ladder, act on replies, escalate on a schedule, and review monthly.

The point of writing it down isn’t bureaucracy. It’s that collections done by memory always degrade into collections done by panic.

Payment behaviour is largely set here rather than in the chasing. Before the first invoice: the due-date rule, the named accounts-payable contact and any PO reference, your late payment position, and the billing rhythm. Copy-ready wording.

Not at month end. Every day between delivery and invoicing is pure delay that never shows up in any metric, because DSO only starts counting once the invoice exists. If monthly billing is genuinely necessary, move to twice monthly and you have halved the average lag for free.

Make the invoice hard to query while you’re there: clear line items, the reference their finance team needs, an unmissable due date, an obvious way to pay.

Match payments received against invoices raised, every week, same slot. This is what makes everything downstream trustworthy, and it is the step that prevents the worst thing you can do — chasing a client who has already paid.

Resolve exceptions the same week: lump-sum payments, missing references, short payments. They are cheap to sort out now and genuinely difficult five weeks later. More on reconciliation.

A fixed escalation, applied consistently, beats sporadic bursts of effort even when the individual messages are less polished:

• A courtesy note a day or two before the due date.
• A friendly reminder around 3 days overdue.
• A firmer, specific follow-up at 14 days.
• A formal notice at 30, with a requested confirmed payment date.

Use the aging report to decide who needs a human this week — largest first within each bucket — and let the standard ladder handle the rest.

The step small teams most often have no system for, and the one that decides whether the ladder helps or harms. Three inbound cases, three different responses:

• A promise to pay. Record the date somewhere that isn’t your memory, pause the ladder until it passes, and follow up the next morning quoting what they said.
• A dispute. Stop chasing entirely. Acknowledge in writing, separate the disputed amount from the undisputed balance, and resolve the question before resuming.
• A question. Answer it quickly. An unanswered question is a parked invoice, and the delay is now yours rather than theirs.

Whatever happens on a call goes into an email afterwards. The paper trail is what you will need if this ever escalates.

Decide the escalation points in advance so the decision isn’t made on a bad morning: a phone call somewhere around 45 days, a formal letter before action around 60, then a decision to pursue or write off. Having the sequence pre-agreed is what keeps the tone factual when you get there. What each step involves.

Fifteen minutes on things no individual invoice will tell you: which clients are late every single month, whether the share of receivables past 60 days is growing, which stage of the ladder actually produces payment, and whether anything got missed.

Repeat offenders are a terms problem, not a chasing problem. Fix them with deposits, shorter terms or milestone billing rather than by chasing harder every month.

Write the process down before automating any of it — automating an undefined process just makes it inconsistent faster. Once it’s written, steps 2 to 5 are the mechanical ones.

Grace Period handles the ladder and the reply-handling part: it reads overdue invoices from QuickBooks, Xero, FreshBooks or FreeAgent, drafts reminders whose tone matches how late each one is, pauses when a client replies, holds them to any date they promise, and stops everything when the invoice reconciles as paid. You approve each message. Steps 1, 6 and 7 stay yours — those are judgement, not process.