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Managing accounts receivable (AR) can make or break your business's cash flow. When customers take too long to pay, it affects everything — from daily operations to growth opportunities. And the numbers tell a concerning story: 45% of U.S. small business owners skip their own paychecks because of cash flow issues. That's a tough situation for any business owner.

Some industries face bigger AR challenges than others. Take management companies, for example — they wait an average of 125 days to get paid. Oil and gas extraction companies aren't far behind at 111 days. Even technical schools deal with payment cycles stretching beyond 109 days.

But here's what you need to know: AR collection periods don't have to be a constant struggle. When you get them right, you're doing more than just keeping money flowing — you're building stronger relationships with your clients and setting up your business for growth. That's what makes improving AR collection periods so valuable. And that’s what the following tips will help you with.

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Tip 1: Automate Invoicing and Payments

Getting paid shouldn't be complicated. But if you're still doing things manually, you're making it harder than it needs to be. The good news? Technology can transform how you handle AR. According to a recent study, 70% of companies report better AR performance when they use the right tech tools (for instance, Fazeshift).

When you automate your invoicing and payments, you're doing more than saving time — you're cutting down on mistakes that can delay payments. Think about it: no more typos in invoice numbers, no forgotten follow-ups, and no missed payment notifications. Your team can stop worrying about sending reminders and focus on more important tasks.

Adding electronic payment options makes it easier for customers to pay you. ACH transfers keep costs down compared to credit card fees. And when you give customers a direct link to pay, they're more likely to do it right away. That means better cash flow for you.

But automation isn't just about sending invoices faster — it's about creating a system that works for both you and your customers. When paying bills becomes easier for them, they're more likely to pay on time. And when payments come in faster, you can put that money to work for your business sooner.

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Tip 2: Simplify Payment Processes

Your payment process affects your collection speed. When clients have to jump through hoops to pay you, they're likely to put it off. But when you make it simple, they'll pay faster.

Start with the basics: clear payment terms in everyday language. You don't want your clients scratching their heads over confusing jargon. A good approach is putting all payment options right on the invoice — front and center. And when clients know exactly what they need to do, they're more likely to do it quickly.

Consider offering multiple payment options tailored to customer preferences, such as credit card payments, ACH transfers, or online payment links.

Keeping in touch with clients about payments also doesn't have to be complicated. Send them updates when things change. Let them know they can ask questions. A quick chat can stop a small issue from turning into a big delay.

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Tip 3: Establish Clear Payment Terms from the Start

Getting payment terms right from day one makes a huge difference. When everyone knows what to expect, you'll see the money come in faster. Put everything in writing — from when payments are due to how clients can pay you. That way, there's no room for confusion.

Sometimes clients need a little flexibility with payments. Having options like installment plans can help you get paid while keeping good relationships. And that's important — because a client who feels heard is more likely to prioritize your invoices.

Using good collection management software helps too. It keeps everything in one place and sends reminders automatically. Your team won't have to chase down information or remember to follow up — the system does it for them.

Remember: strong payment terms support your bottom line. They're key to assessing business health and performance through DSO impact. The clearer you are about expectations up front, the smoother your collections will be down the road.

Want to make it even better? Create a simple one-page guide for new clients that covers all your payment details. This small step can save hours of back-and-forth later.

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Tip 4: Keep Up with Past-Due Invoices

Staying on top of past-due invoices makes a big difference in your cash flow. When you let overdue payments slide, they can pile up fast. But a good follow-up system keeps the money coming in — and keeps your relationships with clients strong.

The key is being consistent. When clients know you're paying attention to their accounts, they're more likely to prioritize paying you. And reaching out regularly doesn't have to feel like you're pestering them. A friendly reminder can actually help strengthen your connection with clients.

Here's what works well for most businesses:

• Send a gentle reminder right after the due date
• Check in again a week later if you haven't heard back
• Make a phone call after two weeks
• Consider bringing in extra help if you're still waiting after a month

Using good AR software makes this whole process easier. It can send automatic reminders and keep track of who said what and when. That way, you don't have to rely on memory or spreadsheets to know where things stand.

But don't just send the same message to everyone. Take a minute to personalize your follow-ups based on your history with each client. A quick note that shows you remember your last conversation can go a long way.

And keep good records of every chat, email, and phone call about payments. You'll be glad to have these notes if you need to discuss an account with your team later. Or if you eventually need to bring in outside help to collect.

At Fazeshift, we know these conversations often include sensitive financial details. That's why we've made security a top priority — your data stays protected and private, just as it should.

Pro tip: following up on late payments isn't about being pushy. It's about maintaining good business relationships and keeping your cash flow healthy. When you handle it well, you can turn a potentially awkward situation into a chance to build trust with your clients.

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Tip 5: Prioritize Collections Based on Client Balances

A good aging report can transform how you handle collections. When you see all your unpaid invoices sorted by age, you'll spot the accounts that need your attention right away. And in today's business climate, timing matters — 19 out of 212 industry segments have more than 10% of their aging dollars sitting at 91+ days past due.

Looking at your aging reports helps you work smarter. You can see which clients owe the most and who's falling behind on payments. This way, you'll know exactly where to focus your team's time and energy.

When it comes to high-value accounts that are past due, you might want to reach out more often. A quick phone call can show clients you're paying attention and care about working things out. And for bigger balances, consider offering payment plans that work for both sides.

Here's something interesting about early payment incentives: Many businesses offer discounts to speed up payments. In fact, the average discount is 4.1% for early payments on invoices. That might seem like a lot, but when you're dealing with large balances, getting paid faster can be worth the cost.

Your approach to each client should match what they owe. A client with a $50,000 balance needs more attention than one who owes $500. By focusing on the accounts that matter most, you can make a bigger impact on your cash flow. And you'll build stronger relationships with your key clients along the way.

Think about setting up different strategies for different balance levels. High-value accounts might get personal calls, while smaller ones could get automated reminders. The goal is to use your resources wisely while keeping all your accounts moving forward.

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Tip 6: Train Staff in Effective AR Processes and Communication Skills

Your AR team needs more than just technical knowledge — they need great communication skills too. When they talk to clients about money, the way they handle those conversations can make all the difference.

Good customer service should be at the heart of collections. Your team can be firm about getting paid while still treating clients with respect. It's about finding that sweet spot between being professional and being understanding.

Here's what makes AR training really work:

• Lots of practice with real-world scenarios
• Clear guidelines on handling tough conversations
• Regular feedback from experienced team members
• Focus on both technical skills and communication
• Tips for staying calm when clients get frustrated

Teaching negotiation skills is crucial too. Your team should feel confident working out payment plans or discussing late invoices. Role-playing helps — it gives them a chance to practice different situations before they face them with real clients.

Ethics matter a lot in collections. Your team should know how to get results while building trust. When clients feel they're being treated fairly, they're more likely to work with you on finding solutions.

The results of good training show up in your bottom line. Teams who communicate well tend to collect more payments, and they do it while keeping clients happy. That's good for cash flow and great for long-term business relationships.

But training shouldn't be a one-time thing. Regular updates help your team stay sharp and handle new challenges as they come up. They can share what works, learn from each other, and keep getting better at what they do.

A well-trained AR team not only collects money efficiently, but also builds relationships that help your business grow. And those relationships often lead to clients who pay on time because they value working with your company.

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Tip 7: Use Technology with Dedicated AR Management Software Solutions

Modern AR software can transform how you handle collections. With the right tools, your finance team can stop spending hours on paperwork and start focusing on what really matters — building relationships with clients and improving cash flow.

The AR automation market is booming, and for good reason. By 2030, it's expected to reach $1.38 billion in the U.S. alone. More businesses are seeing how automation can change their AR game.

When you bring all your AR processes into one system, everything gets easier. You can see exactly what's happening with your cash flow at any time. And when routine tasks run on autopilot, your team has time to work on bigger projects.

Automation cuts down on mistakes too. No more typos in invoice numbers or forgotten follow-ups. The software handles the details, so you can trust that everything's running smoothly. And when there's less busy work, your team can put their skills to better use — like working with clients or planning ahead.

But it's the data insights that really shine. Good AR software shows you patterns in how customers pay, what collection strategies work best, and where you might need to adjust your approach. These insights help you make smarter decisions about credit and collections.

The best part? Many of these systems work well with what you already have. You can keep your current accounting setup while adding new capabilities. It's about making your existing processes better, not starting from scratch.

When you use the right technology, collecting payments becomes smoother for everyone. Your team spends less time chasing payments and more time on work that grows your business. That's what good AR management is all about.

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Final Thoughts

Better AR collection periods can transform your business's financial health. When you put these seven tips into action, you'll see real changes in how quickly payments come in and how smoothly your AR process runs.

Here's your quick guide to better AR collections:

• Automate invoicing and payments to cut down on mistakes
• Make your payment process simple and clear for clients
• Set payment terms from day one to build trust
• Stay on top of past-due invoices with timely follow-ups
• Focus on high-value accounts first
• Train your team in both systems and communication
• Use good AR management software to tie it all together

Making these changes isn't just about getting paid faster — though that's certainly important. It's about creating an AR process that works better for everyone. Your team spends less time on paperwork, your clients have a better experience, and your business has the cash flow it needs to grow.

Take one step at a time. Pick the tip that will help your business most right now and start there. As you see results, you can bring in more of these practices. The sooner you begin, the sooner you'll see improvements in your AR collections.