Accounts receivable management: 9 best practices for steady cash flow

Accounts receivable management is the set of policies and habits that turn invoices into cash on time. Good AR management is less about chasing harder and more about removing the reasons payments are late.

1. Agree terms in writing

Payment terms, late fees and interest belong in the contract, not first on an overdue invoice.

2. Check credit before extending it

For large or new accounts, check payment history and set a credit limit.

3. Invoice immediately and accurately

Every day between delivery and invoice is a day added to your DSO.

4. Make paying easy

Offer the methods customers actually use and include a payment link.

5. Remind before the due date

A pre-due reminder catches missing POs and approval problems while there is still time.

6. Prioritise by value and age

A few balances usually make up most of the exposure. Work those first.

7. Keep one record of every contact

A shared log prevents duplicate chasers and gives you evidence if a dispute arises.

8. Measure outcomes, not activity

Track DSO, aged balance and cash collected. Emails sent is not a result.

9. Keep humans on high-risk steps

Automate data work, not judgement. Anything sent to a customer, and any write-off or discount, should be approved by a person.

Accounts receivable management services

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Frequently asked questions

What is accounts receivable management?

The policies and processes a business uses to extend credit, invoice, track and collect money owed by customers.

How can I improve accounts receivable management?

Agree terms upfront, invoice accurately and immediately, remind before due dates, prioritise large and old balances, and measure DSO.

What is a good DSO?

It depends on your industry and terms. A useful benchmark is a DSO not far above your standard payment term, for example under about 45 days on net 30.