8 min read

The Accounts Receivable Process and How to Shorten Collections

Written by

Omer Bloch - CEO of Remote Latinos | 6+ years of experience in Hiring and Sales | USA

Published on

November 10, 2026

The accounts receivable process is the path an invoice takes from the moment you deliver work to the moment the cash lands in your bank account: set credit terms, invoice promptly, remind on a schedule, apply payments, and escalate what stays unpaid. Collections get shorter when each of those steps happens on a fixed day, not when someone remembers.

Most small businesses do not have a collections problem. They have a consistency problem. Invoices go out when the owner has time, reminders go out when the bank balance looks low, and nobody can say on a Monday morning which customers owe what.

Here we map the invoice to cash path, give a reminder cadence you can copy, show how to measure whether it is working, and explain which steps an accounts receivable assistant can own without ever touching your bank credentials.

Key Takeaways

The accounts receivable process has six steps: terms, invoicing, reminders, payment application, reconciliation and escalation.
Cash flow pressure is common. The Federal Reserve Banks' Small Business Credit Survey found that 51% of small employer firms faced uneven cash flow, a challenge that includes collecting receivables.
Days sales outstanding, or DSO, is the one number to watch. It tells you how many days of sales are sitting unpaid.
A written reminder cadence, starting before the due date, does more than a stronger tone in the final notice.
An assistant can send invoices, run reminders and match payments with read only access to banking data. Moving money stays with the owner or the accountant.

What Is the Accounts Receivable Process?

Accounts receivable is the money customers owe a business for goods or services already delivered. The accounts receivable process is the routine that turns that balance into cash: invoicing, following up, recording payments and handling the accounts that do not pay.

Accounts receivable sits on the balance sheet as an asset, but it is an asset you cannot spend. Payroll, rent and suppliers are paid from cash, not from invoices. A business can be profitable on paper and still miss payroll if too much of its revenue is waiting in receivables.

The Federal Reserve Banks' 2025 Report on Employer Firms, drawing on the 2024 Small Business Credit Survey, found that 51% of small employer firms faced uneven cash flow as a financial challenge in the prior 12 months, and the survey's definition of that challenge includes collecting receivables (Federal Reserve Banks, 2025).

For a small business, a tighter receivables routine is often the cheapest source of working capital available.

What Are the Six Steps From Invoice to Cash?

The invoice to cash path has six steps, and each one has a single owner and a fixed timing. When a step has no owner, it slides, and the slide shows up later as aged receivables.

Set credit terms before the work starts. Payment terms, due dates, late fees and accepted payment methods belong in the proposal or contract, not in the first reminder.
Invoice on the day the work is delivered or the billing period closes. Every day between delivery and invoice is a day added to collection time.
Send reminders on a schedule. The cadence below starts before the due date, while the customer still intends to pay on time.
Apply payments the day they arrive. Match each deposit to the right invoice so the open balance list stays accurate.
Reconcile weekly. Compare the receivables ledger to bank deposits and resolve anything that does not match.
Escalate on a rule, not on a mood. Decide in advance what happens at 30, 45 and 60 days past due.

Step two is the one owners skip most often. Invoicing feels administrative, so it waits for a quiet afternoon. A business that invoices weekly instead of on delivery adds days to every payment before a single reminder is sent.

What Reminder Cadence Actually Gets Invoices Paid?

A reminder cadence that starts before the due date and follows fixed intervals gets more invoices paid on time than occasional reminders sent after a bill is already late. The point of early reminders is not pressure. It is catching invoices that went to the wrong inbox, need a purchase order, or are waiting on someone's approval.

The cadence below is a starting template. Adjust the channels and wording to your customers, but keep the days fixed.

Timing	Action	Channel	Purpose
Invoice day	Send invoice with a payment link	Email	Make paying the easiest next step
3 days before due	Friendly heads up with the amount and due date	Email	Catch invoices stuck in approval
Due date	Short note that payment is due today	Email	Anchor the date
3 days past due	Reminder with the invoice attached again	Email	Remove the "never received it" reason
7 days past due	Phone call to the person who approves payments	Phone	Find the real blocker
15 days past due	Written reminder that late terms apply	Email and phone	Restate the agreed terms
30 days past due	Owner to owner conversation and payment plan offer	Phone	Recover the relationship and the cash
45 days past due	Pause new work until the account is current	Email	Stop the balance from growing

The phone call at day seven matters more than any email. Most late invoices are not refusals. They are stuck somewhere, and a two minute call finds out where.

How Do You Measure Whether Collections Are Getting Shorter?

Days sales outstanding measures how many days, on average, it takes to collect revenue after a sale. Calculate it monthly as accounts receivable at month end, divided by total credit sales for the month, multiplied by the number of days in the month.

Say a business ends the month with 60,000 USD in receivables after 90,000 USD in credit sales over 30 days. Its DSO is 20 days. If the payment terms are net 15, customers are paying about five days late on average.

Pair DSO with an aging report that groups open invoices into current, 1 to 30 days past due, 31 to 60, 61 to 90, and over 90. DSO tells you whether the overall trend is improving. The aging report tells you which customers to call this week.

Track both on the same day every month. A falling DSO with a growing over 90 bucket means most customers pay faster while a few old balances are quietly turning into bad debt.

What Can an Accounts Receivable Assistant Do Without Bank Access?

An accounts receivable assistant can run almost the entire process without the ability to move money. Sending invoices, running the reminder cadence, making collection calls, matching deposits to invoices and preparing the aging report all work with view only access to the bank feed and edit access to the invoicing system.

Write the role as an outcome before you write the duties. Lou Adler argues for defining work as a series of performance objectives rather than as a list of skills and competencies, which widens the pool to everyone who can actually produce the result (Adler, 2022). For this seat the result is days sales outstanding, not a list of software names.

Task	Access needed	Who should own it
Create and send invoices	Invoicing or accounting software	Assistant
Run the reminder cadence and calls	Email, phone, customer list	Assistant
Match deposits to open invoices	View only bank feed inside the accounting software	Assistant
Prepare the monthly aging report and DSO	Reporting access	Assistant
Approve write offs or payment plans	Decision authority	Owner or controller
Issue refunds or move funds	Bank credentials	Owner or accountant only

This split follows a standard internal control idea called segregation of duties: the person who records payments should not be the person who can send money out. It protects the business and the assistant at the same time.

A remote assistant in Latin America works during United States business hours, which matters for the day seven phone call. Remote Latinos places vetted accounts receivable and bookkeeping assistants, with placements commonly running 1,000 to 1,600 USD a month depending on experience.

You can hire a vetted remote accounts receivable assistant or see the roles most commonly staffed remotely. If you are still deciding how to staff the books overall, our guide on hiring a bookkeeper in house, remote or through a firm compares the options.

When Should You Escalate an Unpaid Invoice?

Escalate when an invoice crosses a threshold you set in advance, usually 30 days past due for a conversation and 45 to 60 days for pausing work. Deciding the rule ahead of time keeps escalation from feeling personal, for you and for the customer.

At 30 days, the owner or account manager should talk to the customer directly and offer a payment plan if cash is the real issue. At 45 days, pause new work. Past 60 to 90 days, decide between a final demand letter, a collection agency or small claims court, and talk to your accountant about how the balance should be treated in your books.

Write the escalation rules into a one page procedure so whoever runs collections applies them the same way every time. Our guide on how to write an SOP a remote team will actually follow shows a quick way to document it.

Conclusion

The accounts receivable process is six steps run on a fixed calendar: terms, invoicing, reminders, payment application, reconciliation and escalation. Collections get shorter when invoices go out on delivery, reminders start before the due date, and someone calls on day seven.

Measure DSO and the aging report monthly. Give the routine work to an assistant with view only bank access, and keep approvals and money movement with the owner.

You can also read:

See how other owners handed off finance tasks in the client testimonials, or book a call to scope an accounts receivable role.

Frequently Asked Questions

What is the accounts receivable process?

The accounts receivable process is the routine a business follows to collect money customers owe for delivered work: setting payment terms, sending invoices, following up with reminders, recording payments, reconciling against the bank, and escalating unpaid balances.

How to improve accounts receivable process?

Invoice on the day work is delivered, start reminders three days before the due date, call the person who approves payments at seven days past due, apply payments daily, and review DSO and the aging report every month. Most of the improvement comes from doing each step on a fixed day.

How to process accounts receivable?

Record each sale as an invoice in your accounting software, send it with a payment link, track it on an aging report, match incoming payments to the right invoice, and reconcile receivables against bank deposits weekly. Unpaid invoices follow a written escalation rule.

What is accounts payable and accounts receivable process?

Accounts receivable is money owed to your business by customers. Accounts payable is money your business owes to suppliers. The receivable process collects incoming cash; the payable process schedules and approves outgoing payments. Keeping the two with different people is a standard part of segregation of duties.