Managing accounts receivable effectively is essential for every growing business — it’s what keeps the cash flowing and relationships strong. Implementing the right accounts receivable best practices can help your finance team not only collect payments faster but also maintain smoother client interactions and healthier cash flow.
In today’s competitive environment, finance teams can’t afford delays or inconsistencies in receivables. That’s why mastering the fundamentals — from automation to communication — makes all the difference.
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Why Accounts Receivable Matters More Than Ever?
In today’s volatile business landscape, cash is the heartbeat of growth. Even profitable companies can hit turbulence if receivables aren’t managed effectively. Delayed payments mean delayed growth, strained vendor relationships, and unnecessary financing costs.
Modern finance teams are realizing that AR isn’t just a back-office task — it’s a strategic lever for liquidity and customer experience.
Mastering Accounts Receivable: 7 Best Practices
1. Set Clear Payment Terms from Day One
Clarity prevents conflict. Communicate your payment terms right at the contract stage — including due dates, penalties, and discounts. Clear terms establish professional boundaries and help avoid awkward follow-up conversations later.
Tip: Reinforce payment terms on every invoice and in every reminder email to maintain consistency.
2. Automate Invoice Delivery and Tracking
Manual invoicing often leads to errors and delays. Automating your accounts receivable process ensures invoices are sent instantly, tracked in real time, and followed up automatically — without relying on manual checks.
AR platforms like FinFloh help you gain full visibility into receivables, automate reminders, and keep your DSO (Days Sales Outstanding) under control.
3. Segment Your Customers by Payment Behaviour
Not all customers pay the same way. Segmenting your customers based on payment history allows you to personalize your approach.
- Reliable payers: Maintain good relationships with occasional check-ins.
- Inconsistent payers: Set automated, friendly reminders.
- High-risk clients: Consider upfront payments or tighter credit controls.
This strategy makes your follow-ups smarter — not harder.
4. Strengthen Communication and Relationships
Collections don’t have to feel confrontational. A polite, proactive tone can make a big difference. Build rapport with finance counterparts on the customer side. Often, delays are due to process gaps — not intent.
Remember: People pay people, not systems. Keep your communication human and respectful.
5. Track Metrics That Matter
Effective AR management depends on visibility. Track key metrics such as:
- Days Sales Outstanding (DSO)
- Collection Effectiveness Index (CEI)
- Aging Report Trends
- Percentage of Overdue Invoices
Monitoring these KPIs helps identify bottlenecks early and measure improvement from new initiatives or automation.
6. Integrate the Accounts Receivable Data with Your ERP and CRM
Siloed data slows you down. Integrating accounts receivable systems with your ERP or CRM ensures everyone — from sales to finance — sees the same information.
This alignment not only speeds up decision-making but also enables customer-facing teams to address payment issues before they escalate.
7. Adopt an Accounts Receivable Automation Platform
At a certain scale, manual AR management just doesn’t cut it. Automation platforms like FinFloh help you:
- Send reminders at the right time
- Prioritise follow-ups intelligently
- Provide real-time dashboards and insights
- Improve team collaboration
By embracing automation, finance teams can spend less time chasing payments and more time driving strategy.
Conclusion
Adopting these accounts receivable best practices isn’t just about improving collections — it’s about building financial resilience. With the right mix of clear communication, smart segmentation, and automation, your business can transform receivables from a reactive task into a strategic advantage.
Talk to Our Experts or Book a quick demo — and see how automation can simplify your collections workflow.
