What's the best way to track accounts receivable?
Invoice promptly and consistently. If invoices go out late, payments come in late, and your AR tracking turns into a catch-up exercise. Send invoices the same day you complete work or deliver products. For ongoing services, set up recurring invoices so you’re not manually creating them each month and forgetting some.
Record payments the day they arrive. When a check comes in or a payment hits your bank account, enter it in your accounting software immediately. Waiting until the end of the week means your aging reports don’t reflect reality. You’ll end up chasing customers who already paid while missing the ones who are actually late.
Run your aging report weekly. Every accounting system has one. It groups outstanding invoices by how long they’ve been unpaid, typically showing current, 1-30 days, 31-60 days, 61-90 days, and over 90 days. This tells you who owes money and how long they’ve owed it. The over-60 bucket needs more aggressive follow-up than the current bucket.
Apply payments to the correct invoices. Partial payments, multiple invoices paid with one check, and deposits against future work create confusion if you don’t handle them properly. When you record a payment, apply it to the specific invoice it covers. Unapplied credits sitting on customer accounts make your AR balance unreliable and create awkward conversations when customers think they’re paid up but your system says otherwise.
Build a follow-up process for past-due invoices. Don’t wait until an invoice is 90 days late to reach out. Send a friendly reminder at 7 days past due. Make a phone call at 30 days. The longer an invoice ages, the less likely you’ll collect it. Consistent follow-up catches problems early, whether that’s a customer who forgot, a disputed charge, or someone with cash flow issues you need to work out.
Set clear payment terms and put them on every invoice. Net 30 is common but you might need Net 15 or due on receipt depending on your industry. Professional invoicing includes clear terms, accurate descriptions of what was delivered, and easy ways for customers to pay. Ambiguity leads to delays.
Reconcile your AR to bank deposits regularly. Total payments recorded should match total deposits. If they don’t, either you missed recording a payment or recorded one that never came in. This catches errors before they compound into bigger problems at month end.
Watch your days sales outstanding if you want to measure how well your collection process is working. If your terms are Net 30 but customers average 48 days to pay, something in your process isn’t working. Maybe invoices are unclear, maybe you’re not following up, or maybe you’re extending credit to customers who shouldn’t have it.
The businesses that struggle with AR tracking usually have one of two problems. Either they’re inconsistent about invoicing and recording payments, so their books are always a few weeks behind reality. Or they’re not reviewing the aging report, so problems grow until they’re serious. Phoenix area bookkeeping services can help establish the systems and habits that keep AR accurate without consuming your time. But the fundamentals are the same whether you do it yourself or get help. Invoice fast, record payments immediately, and review your aging weekly.
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