Getting Paid Faster: A Practical Guide to Managing Accounts Receivable

Businesses go under not because they aren't profitable, but because they run out of cash. And one of the most preventable causes of a cash crunch is sitting on your balance sheet right now: accounts receivable — revenue earned but not yet collected.

The average Canadian small business waits 47 days to collect on a Net 30 invoice. Here's how to close that gap.

Start with your invoice terms — and actually enforce them

The most common AR problem is also the most avoidable: setting 30-day terms and then never following up.

What works:

Net 15, not Net 30 — unless your industry standard is longer, most small businesses have no business reason for 30-day terms. Tighter terms set the expectation faster.
Early payment discounts — "2/10 Net 30" (2% off if paid in 10 days) is a well-understood convention and actually costs less than your typical credit facility.
Late payment interest — include it in your terms. Even if you never charge it, clients know the clock is running.

Invoice immediately — not at month end

Every day you wait to invoice is a day you've added to your collection time. If you complete work on the 3rd, invoice on the 3rd. End-of-month invoicing is a habit that turns 30-day receivables into 60-day ones.

Set a rule: invoice within 24 hours of delivering the work or product.

Make payment effortless

Friction in the payment process is invisible to many business owners but very real to clients. Every extra step is an excuse to defer.

Accept e-transfers — the default for Canadian B2C
Accept credit cards — yes, you pay 1.5–3%, but faster collection more than compensates in most cases
Add Stripe or Square payment links to invoices — clients can pay in two clicks
Use QR codes on paper invoices if you still send them

The moment a client has to print a cheque, write an account number, or call someone, your collection time doubles.

Follow up systematically — before it's overdue

Most business owners only chase invoices after they're late. The best AR management starts before the due date.

A simple follow-up cadence:

Day 0 (invoice sent): Confirm receipt by email or mention it in conversation
Day 25 (5 days before due): Friendly reminder — "Just a heads-up, invoice #1042 is due Friday"
Day 32 (2 days late): Polite follow-up — "I wanted to check in on invoice #1042"
Day 45 (2 weeks late): Firm follow-up — call, don't email
Day 60+: Escalate to a collections conversation

The tone doesn't need to be adversarial. Most late payments aren't malicious — they're a disorganized AP department or a client who forgot. A simple reminder is usually enough.

Use AR aging reports — weekly

The AR aging report sorts your receivables by how old they are: current, 0–30, 31–60, 61–90, 90+. It's the single most important AR management tool.

Run it every Monday. Any invoice in the 31–60 bucket gets a follow-up that week. Anything in the 61–90 bucket gets a phone call. Anything 90+ is in collections territory.

The reason to run it weekly rather than monthly: by the time you do a monthly review, a 31-day invoice is 60 days old and your options are narrowing.

Know when to use a collections agency or lawyer

If an invoice is 90+ days past due and you've had multiple failed follow-ups, you have three realistic options:

Negotiate — offer a settlement (80–90 cents on the dollar) for immediate payment. Cash now beats a slow legal process.
Collections agency — they typically take 25–40% of whatever they collect, but you get something vs. nothing.
Small claims court — for amounts under $35,000, filing fees are low and you don't need a lawyer. Worth pursuing for significant amounts.

Write off the debt if you've exhausted these options — uncollectable AR is a real bad debt expense for tax purposes.

The prevention is in the client selection

Long-term, the most powerful AR improvement is upstream: better client screening. Clients who habitually pay late were usually late before they worked with you. A brief credit check, a professional reference, or simply asking how they manage payables in your onboarding conversation can filter out the worst payers before you're chasing them.

If your AR aging report is showing balances you're not comfortable with, a free financial review is a good starting point. Book a session and we'll show you exactly where the cash is sitting and what it would take to move it.