Here's a Collections Checklist & Workflow for Delinquent Accounts

Posted by Ryan Howard on Aug 16, 2019 7:15:00 AM


Collecting on your accounts is part of normal, healthy accounts receivable management. When invoices or accounts aren't paid on time, however, your business should have a documented process for collections.  Your payment terms and collections policy will be clearly stated on your contract agreements and on your invoices.  

Within this post are best practices for contacting your accounts, when, how often and by what means. Read more to build out a collections checklist and workflow for debt collections. 

Here's a Collections Checklist & Workflow for Delinquent Accounts

When Creating an Invoice

When creating your invoices, your client will know your payment terms as they will be listed on the statement as well as the consequences for non-payment. Your contract will list the details but your invoice, for example, may list specific late fees for delayed payments.  Your invoice can also include incentives for paying early or by paying electronically instead of with a check. 

√ Payment terms on invoice

√ Encourage early payments

√ List consequences for late payments

See also: Can you Charge Late Fees on B2B invoices?

2 Days Before Due Date

If you've not received early payment, you can proactively send a reminder via email of the upcoming due date. Within the email, you can also provide easy-to-use links to your online payment options.

√ Send reminder via email

√ Include easy payment options

On the Due Date

On the date that payment is due, resend the invoice via email and remind them that payment is due today. Let them know that they can contact you if they will not be able to pay on time. 

√ Resend invoice

√ Offer contact information

5 - 7 Days Past Due

If there has been no response to your repeated emails after 5 - 7 business days, pick up the phone and call your contact. Don't make assumptions about why your client hasn't paid. For tips on having a phone conversation with your client about money, click here

Continue attempting contact with your account via email and phone every week, if you're not receiving a response.

√ Attempt phone contact

√ Resend invoice with late fees

√ Stay friendly and helpful

√ Keep trying

Remind Clients to Pay

30 Days Past Due

At 30 days past due, you can take a more aggressive approach to collections. You've now sent multiple emails and included the invoice. You've attempted phone contact and perhaps even spoken with someone. (If you did, take notes of what was said and agreed upon!)

If you are able to speak with someone, now is the time to get a firm commitment of payment expectations. Your client should have a clear understanding that their account will be sent to collections if no payment plans have been made or adhered to.  Let them know that you are willing to work with them on a plan to bring their account current. And as mentioned, take notes and send them a copy of your agreement, asking for acknowledgement.

If you are still not able to talk to someone, leave a voice mail and send an email stating that you would like to work out payment options or the account will go to collections.  Continue to follow up every other week as necessary to bring their account to good standing.

√ Continue to resend invoice with incurred late fees

√ Get commitment to pay

√ Put it in writing

√ Follow up until you reach someone

45 - 90 Days Past Due

At this stage in the collections workflow, you may be tempted to get rude with your client. Instead, take a stern, serious tone that is still approachable. When you do finally speak to someone, you don't want them to shut down completely but you do want them to understand that you mean business. Through email and phone, continue to remind your client that payment is due and take action on other consequences that you've listed in your contract such as stopping work or delaying shipment of goods.  Again, remind them of late fees and the next step in the collections process - a third party collections agency.

√ Continue attempts at contact

√ Stop work or shipment of goods

√ Stay calm but stern

√ Inform that third-party collections is the next step

More than 90 Days Past Due

If you're not reaching anyone or your client is refusing to pay, it's time to try third party collections. Gather all information, contracts, notes and emails and let the professionals get started on getting you paid. Did you know that it's free if they can't collect for you?

√ Hand off the account to the pros

√ Move on to something else


Topics: Accounts Receivable, Commercial Debt Collection