Accounts Receivable Workflow

Updated: 2026-03-04

Accounts receivable (AR) is how you turn work into cash. A clean AR workflow keeps collections predictable and makes your financial reports reliable.

The AR workflow

1) Set clear payment terms

Before invoicing, define:

• due date terms (Net 15/30)
• late fee policy (if used)
• payment methods accepted
• who receives the invoice

Clarity reduces friction.

2) Create and send invoices promptly

Invoice timing matters. The most common AR problem is simple: people invoice late.

Include:

• line items / description
• dates of service
• tax (if applicable)
• due date
• job/project reference (if applicable)

3) Track open invoices

Your “open invoices” list is your to-do list. It should answer:

• who owes you
• how much
• how old it is

4) Collect and apply payments correctly

When money arrives, record it and apply it to the correct invoice(s). This keeps:

• AR aging accurate
• customer balances accurate
• revenue reports clean

Partial payments should reduce the open balance rather than closing the invoice.

5) Review AR aging weekly or monthly

AR aging helps you prioritize:

• current invoices (low risk)
• 30-day invoices (needs attention)
• 60+ day invoices (high risk)

Follow up early—before the invoice gets old.

Common mistakes

• Not sending invoices immediately
• Recording deposits without applying them to invoices
• Letting old invoices pile up without follow-up
• Not reconciling AR against the bank

Related

• Contractor billing basics: /guides/accounting-for-contractors/
• Bank reconciliation: /guides/bank-reconciliation/
• See pricing: /pricing/