How to Better Manage Accounts Receivable
Read “What is Outstanding Accounts Receivable?” →
Managing accounts receivable (AR) isn’t just about booking invoices and waiting for payments. It’s about making sure the cash you’ve earned actually shows up in your bank account - on time - so you can run your business without constantly managing cash flow.
Perhaps your AR process is messy, slow, or purely reactive. Perhaps you don’t even have a process. Don’t worry, you're not alone.
If you’ve ever felt the pain of unpredictable cash flow, awkward client conversations, or delayed growth decisions, here’s how to make that pain go away.
1. Know your baseline: what’s your current AR health?
Start with a quick audit. At any given time, ask:
- How much money is currently invoiced but not yet paid?
Calculate: The value of all your outstanding invoices, regardless of when you sent them.
- What’s your average “days to get paid” (a.k.a. DSO)?Calculate: On each invoice, how many days are between the invoice date and the day you got paid. Divide the sum by the number of invoices.
- Are there any clients who consistently pay late? By how much?
Calculate: On the late-paying clients, how many days are between the invoice due date and the day you got paid. Look at the average of each client separately.
Most businesses wait until year-end to do this. But monthly (or even bi-weekly) check-ins can make you notice these issues early, before they impact payroll or hiring plans. Connecting your bank account to your invoicing platform allows you (in most platforms) to keep track of these numbers without having to calculate them manually.
2. Stop burying payment terms in fine print
Be explicit about when and how you expect to get paid. Jointly discuss the terms before signing a contract or starting a project, and communicate the decided terms in writing. Payment terms are much easier to negotiate when the client needs you, not when you’re chasing their finance team.
Pro tip: Make it obvious what counts as “paid on time” especially when the invoice says “Due upon receipt.” We suggest you’d rather set the number of days, for example net 5, so that you know when to start chasing a client who hasn’t paid.
3. Double check the details in advance
A common reason why invoices aren’t paid on time is that they were sent with some info missing, or gathering that info takes time. Avoid these by:
2. Stop burying payment terms in fine print
Be explicit about when and how you expect to get paid. Jointly discuss the terms before signing a contract or starting a project, and communicate the decided terms in writing. Payment terms are much easier to negotiate when the client needs you, not when you’re chasing their finance team.
Pro tip: Make it obvious what counts as “paid on time” especially when the invoice says “Due upon receipt.” We suggest you’d rather set the number of days, for example net 5, so that you know when to start chasing a client who hasn’t paid.
3. Double check the details in advance
A common reason why invoices aren’t paid on time is that they were sent with some info missing, or gathering that info takes time. Avoid these by:
- Jointly agree on the payment terms and when you’ll send the invoice(s), before the project starts.
- Confirming the correct PO number, billing contact, and project code ahead of time.
- Sending invoices to the right person or directly through their system if needed.
A few minutes of prep early on, or even better before a project starts, can save you weeks of delay.
4. Send invoices as early as possible
Instead of waiting until the end of a project or month, invoice as soon as you can. As soon as the client receives the invoice, the days until the due date start ticking and the client can start processing it.
4. Send invoices as early as possible
Instead of waiting until the end of a project or month, invoice as soon as you can. As soon as the client receives the invoice, the days until the due date start ticking and the client can start processing it.
- Invoicing immediately after key milestones, not at the end of the month.
- Invoicing part of the amount upfront or as a down payment to secure time in your team’s calendar.
- Invoicing in installments instead of when the project has finished.
Many agencies wait for their own vendors’ invoices (freelancers or other project-related costs), but here’s a chance to improve your cash flow massively - by invoicing your client before you get invoiced. Just make sure you know the exact amount you will be invoiced, and you’re good to go.
5. Follow up before invoices are overdue
Don’t wait until a payment is late to check in. A simple reminder a few days before the due date can prevent a late payment altogether. It’s not pushy, it’s professional. Asking whether you sent the invoice to fill their requirements is a sign of respect of their processes.
Pro tip: You don’t always have to send these yourself. Your invoicing platform surely can automate reminders while still making you look polished and proactive. Although nothing beats a personal outreach, of course.
6. Offer a reward for paying early
If you’re consistently getting paid 30, 60, or 90 days after invoicing, consider incentivizing early payments. Offering a 1 - 3% discount for payment within 5 - 10 days can:
- Speed up your cash flow
- Save your client money
- Reduce the need for external financing
It’s a simple, flexible lever that benefits both sides.
7. Make AR part of your growth strategy, not just your accounting
If you’re only thinking about AR during tax season or when cash gets tight, you’re always reacting. We want you to be in control of your cash flow, and stay proactive. Treating your AR as part of your business model, as something you actively manage, you gain more control:
7. Make AR part of your growth strategy, not just your accounting
If you’re only thinking about AR during tax season or when cash gets tight, you’re always reacting. We want you to be in control of your cash flow, and stay proactive. Treating your AR as part of your business model, as something you actively manage, you gain more control:
- Over how and when you grow
- Over who you work with
- Over your financial runway
How Cheque can help
Cheque gives you a smarter way to manage AR - without adding more admin. You send invoices through Cheque, set your own terms, and let clients choose how they want to pay. If they opt to pay early, you get the cash upfront without any chasing.
The best part is that you don’t have to switch your accounting system to test it out.
Want to stop playing the collections game?
Try Cheque next to your current system - no commitment, just faster payments and fewer headaches.
Schedule your demo today →
Read “What is Outstanding Accounts Receivable?” →
Read “How to Offer Early Payment Discounts” →