Cash Collection Process: Best Practices to Get Paid Faster

This article has been co-written by Luis Lomanov, Managing Partner at Upward Insights, and Alex Louisy, cofounder at Upflow.

Upflow’s research across thousands of B2B SaaS finance teams shows the median company collects in 52 days, while the top quartile collects in 33 or fewer. Both groups set broadly similar payment terms, so the difference comes down to how mature their collection process is.

Chasing invoices can be time-consuming and sensitive: you want to be assertive enough with your debtors, without risking the relationship.

And yet, cash collection is a fundamental step in the order-to-cash cycle and is paramount in ensuring business growth. Most of your customers won’t pay you in a timely manner without the right tracking system in place. And because the customer you are chasing this month is often the one you hope to renew next quarter, how you collect shapes the relationship as much as how you sell. Keep reading to learn more about:

Collection emails are an important part of you collection process. Download our free email templates to improve your collection process!

Cash Collection Process: What are the steps?

A well-structured accounts receivable (AR) collections process is crucial for maintaining healthy cash flow and strong customer relationships. Here are five essential steps, adapted from the collection sequence in From Zero to Collected:

1. Generating and Sending Invoices

The process begins with issuing accurate invoices in a timely manner. Each invoice should clearly state payment terms, due dates, and available payment methods to prevent confusion or delays. When done right, this step lays the groundwork for smooth collections.

Four things decide whether an invoice can actually be paid. It goes to the person who handles payment, which is rarely the one who signed the deal. It follows the customer’s route, since many larger customers need invoices submitted through an AP portal with a PO number. It comes from your own domain rather than your billing system’s, so the customer recognizes the sender. And it includes a link to pay, so the customer can settle it while the invoice is in front of them.

2. Tracking Payments

Once invoices are sent, it’s important to monitor payments closely. This helps identify which invoices have been paid, which are past due, and which are nearing their due dates. Platforms like Upflow offer real-time tracking dashboards, enabling quick action on overdue payments and improving cash flow oversight.

3. Sending Payment Reminders

Reminders, both before and after the due date, help reduce payment delays. A soft reminder just before the due date also gives the customer an easy way to flag a problem while there is still time to fix it. These should be professional yet firm, and automating them keeps your timing consistent while saving your team time.

Email carries most of this work, so send from a custom domain and track whether messages actually reach the inbox. For customers who don’t respond to email, an SMS payment reminder tends to get read far sooner. Texting does require consent in most regions (the TCPA in the US), and it works best when used sparingly.

4. Handling Disputes

Customers may occasionally dispute invoices, and resolving these issues quickly and professionally prevents further delays. Most disputes fall into four types: pricing or contract, service, billing error, and tax or compliance. Knowing the type tells you who is best placed to resolve it.

Ask for the same particulars every time, such as the contract clause, the date of the issue, or the support ticket. A customer with a real problem can provide them, which speeds up the fix. A customer who is stalling has nothing to send. Either way, the invoice stays payable until the dispute is settled, and handling it fairly keeps the relationship strong.

5. Escalating and Following Up

When an account has outgrown what finance can handle alone, bring in the heads of finance along with the account’s sales or CS owner, so the customer hears one consistent position. A formal dunning letter puts the balance and the next steps in writing, and a documented payment plan can help a good customer through a difficult period.

As a last resort, tech companies have a stronger lever than a collection agency: suspending product access. It should always be a deliberate, fully warned step rather than something you reach for quietly.

Now that you know the steps in the cash collection process, let’s put a specific focus on three areas within the process that you’ll need to get right to ensure it’s working at it’s best.

We discussed this with Luis Lomanov, Managing Director at Upward Insights, a firm that specializes in helping high-growth businesses set up scalable financial processes and systems.

According to him, the issue is often the same: there’s no structured process when managing AR. Every once in a while, the company’s CEO will look at an aging report and realize that there’s too much cash outside of the bank account.

CEO turns to CFO, who then turns to his controller. From there, the controller frantically spends the next couple of business days sending emails and phone calls to customers past the due date… Issues start to resolve themselves and overdue invoices get paid… Until the next wave of cash flow problems where the broken process repeats itself

Late payment reminders often fall outside of sales cycles. Stranded between different teams whether it be finance, sales, or management, reminders like that aren’t a priority for any single department within the company.

And yet, they should be a top priority for everyone. Bringing cash into the business is just as important as sales and production. It’s also a key indicator of the business’s health and its good-or-bad performance. It should be a big focus in each company’s financial reporting.

Finance teams are usually on the front lines when it comes to cash collecting and cash handling procedures. However, they often lack the time and resources necessary to focus on more than just the largest outstanding cash receipts. While it makes sense to address the most urgent matters, oftentimes they end up neglecting smaller amounts of even more outstanding, yet smaller invoices. Most importantly, when calculated as a whole, these smaller invoices can end up representing a significant amount.

At staffing marketplace Side, 75% of invoices were overdue when their billing lead arrived. With no way to prioritize, the team worked the largest balances and let smaller ones go, and the company was writing off close to 5% of revenue every year.

Most of the time sales teams are out of the loop when it comes to unpaid bills. This is “not their responsibility”, is too time-consuming, and we often hear C-levels saying “our salespeople should be more focused on closing deals, and nothing else”.

While it is common for sales teams to be paid on commission, these commissions are usually based on the amount invoiced, and not the amount of cash collected by the company.This does not always incentivize them to participate in debt collection, even though many companies reverse commission when a customer never pays. We believe this doesn’t help profitability.

A customer who doesn’t make amends to pay may just simply be a bad customer. It should be a primary concern for salespeople, especially when dealing with returning customers. How is it possible to build long-term relationships with customers that do not pay your Company?

Top management and executives should also be concerned about unhealthy AR. A wobbly cash collection process, forgotten invoices, and bad paying customers are risks that impact their working capital and can quickly translate into an empty cash drawer for the company.

Systematic cash collection processes can be tricky to implement since accounting and billing tools are usually poorly adapted to tracking late payments. Improving AR management is a cross-disciplinary business problem. Solutions that attempt to address this problem without involving finance, sales, and management teams are usually doomed to failure.

Having all teams stay on top of receivables is key to the company’s performance and long-term success.

Need help writing effective collection emails? Have a look at our free templates

Luis gave us a great tip on how to classify late-paying customers and how to identify them. He likes to think of the aged AR list as consisting of 3 types of customers: “The slipped through the cracks customer”, “The perpetually late customer” and “The one who never pays”.

1) The Slipped Through the Cracks Customer

2) The Perpetually Late Customer

3) The one who never pays

This is an excerpt from the book: Financial Foundations: Entrepreneur’s Guide to Becoming a Builder

These types are easier to spot once you segment your portfolio. A few customers usually hold most of what you’re owed, so start with two or three segments based on balance and payment behavior. The account to watch is the one drifting off its own pattern, like a customer who paid on time for two years and is now 20 days late.

By setting up a systematic cash collection process, you’re more likely to identify those types of payers early and manage them proactively. That’s where Upflow comes in handy! Our product sends out automated yet personalized emails and offers detailed analytics that will help you get a good overview of your A/R.

Managing accounts receivable is not just about collecting payments—it’s about fostering strong, long-term customer relationships. While automation certainly can improve efficiency, businesses must move beyond transactional interactions and prioritize the customer experience in their collections process.

The truth is, most late payments don’t happen because customers are unwilling to pay. Instead, they result from friction in the payment process—lost invoices, unclear payment instructions, or follow-ups that create unnecessary tension.

Traditional accounts receivable practices, including generic dunning emails and outsourced collection agencies, often alienate customers rather than encourage timely payments.

Instead of treating payment delays as a problem with the customer, businesses should recognize that a poorly designed AR process is often the real issue. The payment step is a good example: an invoice PDF from a noreply address with bank details at the bottom leaves the customer to arrange payment themselves. A branded payment page, a portal where they can pay, dispute or download documents, and autopay for recurring invoices remove most of that friction.

Rather than viewing collections as a back-office function, companies should treat it as part of the financial relationship with each customer and companies should leverage it as a strategic tool for growth. Upflow enables finance teams to take a more customer-centric approach by:

When businesses make it easier for customers to pay, they not only improve cash flow but also strengthen relationships and increase long-term value. A well-designed accounts receivable process should be as seamless and frictionless as possible—because getting paid shouldn’t damage the very relationships that drive business success.

Over the last few years, we’ve talked to hundreds of business owners at Upflow and Upward Insights. Here are our findings from the best-performing companies when looking for the right practices in setting up an efficient cash collecting process.

Systematic

All unpaid invoices must be followed up with payment reminders. It’s an obvious fact, but it is rarely the case.

Systematization, like automatic dunning, will solve the majority of AR problems because most customers want to pay. They just forgot and need a reminder. By addressing the easy accounts with systematization, you can focus the hard legwork on the more difficult accounts.

Systematization will also help you identify problematic customers because those are the ones who ignore automated dunning. Now you know who they are, so you don’t have to waste time figuring out which customers will need special attention.

Additionally, reminders must follow a clearly defined timeline to identify which issues are:

• related to technical issues (invoices not received, errors in billing content, credit card failure, an invoice pending internal approval), usually managed by your finance or controller team
• or related to commercial issues (problems with services, credit notes, returns), usually taken care of by account managers

It’s important to create a systematic escalation process, with proactive steps.

Most customers want to pay. They just need systematic reminders. For the remainder, the earlier you find the issue, the faster it’ll be resolved.

Personalized

Efficient reminders take into account your customer’s business context. The root cause of late payments may vary significantly from one customer to another, depending on geographic location, payment method, and more. The more you take their business context into account, the more likely you are to have an impact.

Before reaching out, check four things: the account’s payment history, its full open balance (including any disputes or unapplied payments), what sales and CS know about the account, and who actually handles payment on the customer’s side.

On the contrary, we often see impersonal, inaccurate, automated emails that do not reflect the business context and relationship you have with your customer. At best, customers dismiss these emails. At worst, they damage the relationship.

Personalize your reminders to improve your response rate and resolve the underlying issues behind late payments faster.

Collaborative

Even though first reminders are often sent by finance teams, project leaders or sales teams often need to step in when a commercial issue has been identified (a dispute, a rebate, etc.). There should be a seamless and systematic transition between the teams involved, and account managers should be aware of any late payments on their accounts. Their involvement often solves the problem faster.

To make that handoff work, set a clear threshold for which accounts finance brings to sales or CS (for example, above a certain balance or past a certain age), what the ask is, and who owns the account afterward.

Broaden how your team is aligned on cash collection to make it more efficient.

Multi-channel

Each communication channel (email, calls, texts, and sometimes letters) should serve a specific purpose in your cash collection process. Most importantly, they should involve the right people on both ends of the conversation. Sending reminder emails to the right billing contact, calling the finance department, and escalating issues to your commercial contact through different channels lets you gauge the level of urgency and get feedback from your customer. Registered letters add proof that notice was received, which matters if an account heads toward legal action.

Diversify your channels of communication to make the cash collection process more impactful.

Prior to adopting Upflow, Staffmatch relied on a manual dunning process that was both time-consuming and error-prone. As a temporary employment agency, Staffmatch’s business model involves rapidly matching temporary workers with client companies, often on short-term contracts.

This rapid turnover and reliance on timely payments to compensate temporary workers necessitates a robust and efficient collections process.

Cécilia Côny, Customer Service and Collections Manager at Staffmatch, explained, “We lacked direct visibility into the status of customer accounts and often struggled to maintain a consistent reminder schedule.”

This manual approach was not only inefficient but also risked overlooking important follow-ups, which could have significant financial implications for Staffmatch.

Upflow’s intuitive platform offered a comprehensive solution to Staffmatch’s challenges. By automating routine tasks and providing real-time insights, the tool has enabled the company to:

READ THE FULL CASE STUDY

Same as with any business decision, changing behaviors is where it starts. Accounts receivable are usually managed correctly when top management makes it a priority for the company. That’s your first step! Hiring a firm or consultant with a proven track record that is skilled in structuring financial processes such as Upward Insights can help you get started and/or keep ongoing.

Once you’ve aligned your team on this, choosing the right tool will become key in making sure the idea is actually being translated into a real process. Accounts receivable automation should take on the repetitive work, such as reminder sequences and payment matching, so your team keeps the judgment calls: which accounts need a person, and when a payment plan makes sense. Your accounting software (QuickBooks, Xero, etc.) or ERP (Netsuite, etc.) might be the right place to start, but many companies are still using spreadsheets to manage AR, while their volume of invoices increases. That makes it difficult to apply the guidelines stated above. If you are looking to move to the next level to manage your AR, please reach out to us, and we can help you supercharge your cash collection process and significantly improve your working capital.

If you’re starting from scratch, you don’t need everything at once. Begin with a segmentation and a basic timeline, then add the rest as volume grows. Our book From Zero to Collected covers each step in detail, from the upstream fixes to dispute handling and the metrics that matter, and you can download the full book for free.

Upward Insights is a consultancy that provides in-sourced finance teams to high-growth businesses. They’re just as engaged as an in-house team but without the cost, training, and heavy management that’s required for an in-house accounting and finance department. Their focus is on building scalable financial infrastructures for their clients. Upward Insights also sponsors a zero to low-cost solutions-driven learning platform for entrepreneurs and employees: CFOPrinciples.com

Upflow is the leading platform for setting up and managing systematic cash collection processes. With Upflow, financial teams can measure and implement efficient processes to regain control over their receivables. Leading companies such as Vercel, Productboard, or Lattice are using Upflow to master their cash collection.