Automating accounts receivable and collections

In most of the BC companies we open up, the gap between finishing the work and receiving the money is longer than it needs to be, and much of the delay happens inside the company. Invoices go out days or weeks after the job. Reminders depend on someone remembering. Payment requires a cheque or a bank transfer the customer has to set up. None of that is the customer's fault.

Automating receivables is one of the fastest ways to free cash, and it does not require new financing or new customers. Here is how we set it up.

Invoice at the moment of completion

The first delay is between the work and the invoice. Connect the job management, scheduling or e-commerce system to the accounting system so an invoice is generated when the job is marked complete or the order ships. Where that connection is not possible, set a rule that every completed job is invoiced the same day, and check it in the weekly pack. Every day between completion and invoice is a day added to collection.

Make the invoice itself easy to pay: the correct contact, a purchase order number if the customer needs one, clear terms, the due date in plain words and a payment link.

Clean up the customer master file before automation starts. Wrong email addresses, missing purchase order requirements and out of date contacts are the most common reason an automated invoice or reminder goes nowhere. One afternoon spent confirming the billing contact and the format each major customer requires pays back in the first month.

Automate reminders before and after the due date

Most accounting platforms used in Canada can send reminder emails on a schedule. Set a courteous reminder a few days before the due date, a reminder on the due date, and firmer reminders at intervals afterward. Write them in your own voice, not the template's. A reminder sent before the due date is a service to the customer's payables team, and it moves the invoice to the top of their list.

Review the reminder schedule for your largest customers separately. Some will need a specific contact and a phone call rather than an email sequence.

Offer online payment

A payment link on the invoice that accepts card and bank payment removes the single largest friction in collection. Card fees are a real cost, so weigh them against the days of collection saved and the cost of your operating line. For larger business customers, pre-authorised debit arrangements make recurring and large payments predictable. Reconcile payments automatically back to the invoice so the receivable ledger is always current.

For recurring services, maintenance plans and retainers, move customers onto automatic payment at sign-up rather than asking later. A customer who agrees to automatic payment at the start rarely objects, while one asked to switch after a year of paying by cheque often does. Put the option on the agreement and make it the default.

Keep people for the exceptions

Automation handles the routine. People handle the rest. Each week, one named person reviews the aging and works a short list: disputed invoices, invoices over a threshold that are past due, customers who have stopped responding to reminders and customers approaching their credit limit. The goal is a conversation, not a demand. Most late payment is a process problem on the customer's side, and a call usually finds the missing purchase order or the wrong contact.

Set a credit policy for new business customers and put credit limits in the system, so the sales team knows in advance when an order needs approval.

Measure it weekly

Two numbers belong on the weekly pack: receivable days, which is how long on average customers take to pay, and the value past due with the largest accounts named. Give both numbers an owner. Track the trend over months. When the numbers improve, the cash forecast improves with them, and the operating line is drawn less.

Collection habits that protect relationships

• Agree terms clearly before the work starts, in writing
• Ask for a deposit or progress payment on large jobs
• Send invoices to the right person in the right format the first time
• Remind before the due date, not only after it
• Call rather than email once an invoice is meaningfully overdue
• Stop work or hold shipments for accounts over the limit, consistently and without surprise