A/R Optimizer » Start Collection Procedures on the Oldest Accounts Receivable

Start Collection Procedures on the Oldest Accounts Receivable

1. Begin Calling Customers

Once a receivable has gone significantly beyond terms, the first step is to call the customer about the status of the payment. The most difficult part of a collection call is finding the reason for the delay. The best way to take control of a collection call is to follow a pattern.


  1. Call the main decision-maker/person in charge.
  2. Identify yourself and your company (the calls should first be called by your company, not a collection agency)
  3. Ask for a payment in full by a certain date.
  4. Be helpful and suggest solutions that would benefit both the company and the customer.


Three common reasons for a non-payment are:

  1. The lack of funds or imagined lack of funds. This may not always be sincere, but whichever the case, the best idea is to suggest ways or help them release funds to pay off their cyclical debt. The customer always comes first.
  2. DisputeWhat most business owners fail to realize is that there may be an underlying issue that needs to be solved by the company, not the customer. Always provide customer service and see if the claim is valid. If the claim is not valid, request immediate payment.
  3. Refusal to pay. Not all customers will be compliant. This may require third-party involvement to enforce policies and procedures.
  4. Turnover in Accounts Receivable. Sometimes, it isn’t the client’s fault. Your company isn’t staying on top of collections due to employee turnover. Read more about this topic here.

Sample Script

Intro: Hello [customer name], how are you today? This is [your name] with [your company]. I’m just calling to follow up on [invoice # ____ ] for [$ ___ ]. According to my records, your payment is [# of days] past-due. I just wanted to make sure there weren’t any issues with the invoice, and if there are, then I would like to help clear those up and determine when the payment will be made.

Conclusion: Wonderful! As you know, our terms are [enter term agreement here], and we want to ensure that all customer’s accounts are in great standing by collecting due accounts on time. Is there anything else we can do to expedite this payment? (if no) Okay, we’ll look for your check in the mail over the next few days. Thank you for your time! 

After making phone calls, always remember to follow up either with another call, in person, or a letter 10 days later.

2. Send Statements

A strong suggestion is to keep the collection letters per series to a minimum. This way, it reduces the amount of time expected for a customer to respond. They are less imperative and sending multiple letters at a time will only prolong the process.

Other tips for collection letters include:

  • Make sure to include all basic information. Include when and how you expect payment, why you expect the payment to be paid in full.
  • Appeal to the paying customer when writing the collection letter, not the delinquent customer. This way, the letter is effective rather than intrusive.
  • Use specific phrasing. Changing a sentence to “we suggest” to “it is to your advantage” is stronger because the customer is only concerned about their own interests.
  • Appeal to pride, honesty, security, and anxiety.
  • Use motivating factors such as “keeping their current account status” or “credit update.”
  • Keep the letter short.
  • Sign the letter personally, even if it is a document or a form.

Letter Template: [box]

[Your Business]
[Street Address]
[City, State, Zip Code]


[Customer First and Last Name]
[Street Address]
[City, State, Zip Code]

Dear [customer name],

As discussed before, you have a balance of [$____ ] that is [# days] past-due. We have corrected any issues within reason involving your payment. In order to keep your standing with our company, please pay the amount due within [ __ ] days. If you have any more issues pertaining to this payment, please feel free to contact us.

Invoice Number   Service Date   Amount Due    Total

  #########       MM/DD/YYYY   $______.__ $______.__


[Your Name]
[Your Company]


3. Identify and Correct

As stated before, some reasons for a customer’s delay in payment are legitimate. It is up to your company to investigate and interview non-paying customers, but at the same time maintain quality customer service.

Personal interviews are the strongest demand for payment, which is why the interviewer must be persistent yet tactful. The process is very similar to a phone call or letter, but the impact is greater. The first step is to confirm all information on the forms that were sent to the customer. Then, you should determine the problem (lack of funds, dispute, or refusal). If the customer still refuses to pay, there is no other way to receive payment than a collection agency.

In any case, do not forget to put the arrangements in writing when you have found a solution.

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