After three decades in the debt collection industry, I’ve seen all kinds of businesses struggle with cash flow challenges, many of which could have been avoided.
And as I’ve built MetCredit into the company it is today, one of my core principles has been to help business leaders prevent collection problems before they start. Having worked with businesses across virtually every industry that operates in Canada, I’ve observed firsthand that cash flow issues rarely appear without warning signs.
Cash flow fuels EVERY aspect of your business operations. Yet many companies struggle with accounts receivable challenges that proper systems and consistent follow-through could prevent.
The Real Cost of Poor AR Management
When invoices go unpaid, the consequences extend far beyond the missing revenue. Consider these ripple effects:
- Restricted working capital for day-to-day operations
- Limited ability to invest in growth opportunities
- Increased administrative costs from collection efforts
- Strained relationships with suppliers when your own payments are delayed
- Additional financing costs to cover cash shortfalls
These are impacts that affect pretty much every aspect of your business. I’ve seen businesses lose thousands of dollars annually due to inefficient collections processes. The pattern is consistent: the longer an account remains unpaid, the less likely you are to recover the full amount. This isn’t theoretical — it’s the reality I’ve seen play out again and again throughout all my years in this business.
Building a Comprehensive AR Strategy
Effective accounts receivable management requires a cohesive system that addresses every stage of the customer payment journey.
Before the Sale
The collection process begins long before an invoice is even created. Smart businesses:
- Establish clear credit policies
- Conduct thorough customer credit checks
- Require written authorization for all orders
- Set explicit payment terms upfront
A shocking number of collection issues stem from unclear expectations or insufficient documentation at this early stage.
Invoice Management
Your invoice functions as both a payment request and a communication tool. Effective invoices:
- Are delivered promptly after service completion
- Clearly state payment terms and due dates
- Include all necessary details for easy processing
- Offer convenient payment options
The faster and clearer your invoicing process, the quicker you’ll receive payment. It’s a proven fact.
Proactive Follow-Up
Don’t wait until an account is severely overdue to take action. A structured follow-up system includes:
- Friendly payment reminders before due dates
- Prompt communication when payments are missed
- Consistent escalation processes for aging accounts
- Detailed documentation of all payment discussions
Research shows that businesses with systematic follow-up procedures experience significantly shorter payment cycles and write off less bad debt.
Professional Intervention
Even with excellent AR practices, the law of averages says that some accounts will become problematic. Knowing when to seek professional collection assistance is crucial. Industry experts recommend:
- Evaluating accounts at 60 days past due (we say 60 is the new 90)
- Promptly addressing customers who have “gone dark“
- Understanding that recovery rates diminish dramatically after 90 days, and and doing what it takes to avoid getting that far
Professional collection agencies bring specialized expertise that often makes the difference between recovery and write-off.
Putting Knowledge Into Action
Understanding best practices and implementing them consistently often present different challenges. To help bridge this gap, we’ve created a free, printable Accounts Receivable Best Practices Guide.
This one-page resource distills essential AR management principles into a practical checklist format that you can post right at your desk (or at your AR Manager’s). It serves as a daily reminder for Accounts Receivable professionals, business leaders, bookkeepers and entrepreneurs who want to maintain strong collection processes.
Moving Forward
Strengthening your accounts receivable process requires an ongoing commitment to operational excellence. By implementing systematic approaches from pre-sale verification through collection, you’ll create a more predictable cash flow and stronger business overall.
From one business leader to another, I can tell you that the companies that thrive are those that master these fundamentals. That’s why my team and I have created this resource — to share what we’ve learned from decades of seeing what works (and what doesn’t) in AR management.
Ready to transform your AR management? Download our FREE Accounts Receivable Best Practices Guide and take the first step toward more consistent collections and improved cash flow.
MetCredit provides professional collection services when you need expert assistance. Access our services 24/7 through MyMetCredit.com
President and CEO of MetCredit, Canada's top-performing consumer and commercial collection agency
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