The weekly routine
Pick a fixed slot. Tuesday morning works well: Monday’s deposits have cleared, and there’s time to follow up before Friday payment runs. The order matters, because each step makes the next one accurate.
- Record everything that came in. Apply deposits, checks and card payments to invoices before you look at what’s overdue. Most embarrassing reminders come from skipping this step.
- Run the aging report by due date. Not invoice date. You want to know how late things are, not how old.
- Work the promises. Anyone who promised a date last week: did it arrive? If not, they get a short, specific note today.
- Send by stage. Just late: a friendly nudge with a pay link. A week late: ask for a payment date. Two weeks: copy accounts payable. A month: pick up the phone.
- Clear the questions. Resend the invoice with the PO number, fix the contact, answer the line-item query. These are usually what’s actually holding the money.
- Write it down. One line per customer: what you sent, what they said, what’s next. Whoever covers for you next month will need it.
Done weekly, the work stays small: every reply is fresh and every customer is only a little late. Done monthly, the same work balloons, because every reply is older, every customer is later, and you spend half the time working out what was already said.
Three numbers worth watching
You don’t need a dashboard of twenty metrics. These three, written down every week, tell you whether receivables are getting better or worse.
| Number | How to get it | What it tells you |
|---|---|---|
| Overdue balance | Total of invoices past their due date, from the aging report. | How much cash is late right now. Watch the trend, not the level. |
| Days sales outstanding (DSO) | AR ÷ credit sales × days in period. | How long, on average, a dollar of sales takes to become cash. |
| Promises kept | Promised payments that arrived by the date ÷ all promises due that week. | Whether customers mean it. A falling rate is an early warning. |
The third number is easy to skip, and especially useful for small teams. A customer who promises and pays is fine. A customer who promises three times and pays once needs a different conversation.
Working DSO out by hand
DSO sounds like a finance-team metric. It’s simple enough to work out on the back of an envelope, and worth doing once so you know what the number means.
Example. At the end of the quarter you have $68,000 in open receivables. Over the quarter (90 days) you invoiced $120,000 on credit.
DSO = 68,000 ÷ 120,000 × 90 = 51 days.
If your standard terms are net 30, customers are paying about three weeks late on average.
Two warnings. DSO swings with sales: a big invoice sent on the last day of the quarter pushes it up even if nobody is late. And it’s an average, so one very late customer can hide behind many prompt ones. Use it for direction over several months, and the aging report for decisions this week.
What software takes off your plate
Look at the routine again and sort the steps into two piles: repetition and judgment.
- Repetition: sending reminders by stage, checking whether promised money arrived, noticing a reply that says “paid already”, recording a payment that came through a pay link, keeping the log.
- Judgment: deciding what to do about a disputed invoice, calling a customer who has gone quiet, deciding whether to keep working with someone who pays at day 75.
Receivables software should take the whole first pile and hand you the second pile already sorted. The test of a good product is what your Tuesday morning looks like after a month: a short queue of invoices that genuinely need you, with the context attached, rather than the full aging report.
Two things to check when choosing. First, that it reads replies, not just sends emails; otherwise you still own the inbox. Second, that payments flow back into your accounting system, so the aging report you run is the truth and not a copy that needs reconciling.
What stays with you
Some parts of receivables management shouldn’t be automated, at least not at small scale:
- Terms. Shorter terms and deposits on large jobs prevent more late payments than any reminder.
- The phone call. After a month of silence, a call from a person gets answers that emails don’t.
- The relationship decision. Whether to pause work, require prepayment, or let a slow payer go is a business call, not a workflow.
Hand the repetition to software, keep the judgment, and the routine stays short enough that it actually happens every week.