What it is
The AR & Collections Workflow Template is a structured dunning system for accounts-receivable collections, the cadence of reminders, escalations, and decisions that converts aging invoices into collected cash without damaging customer relationships. It is built around AR aging buckets so your team always knows exactly what action to take, through which channel, and who owns it, at every stage from invoice sent to 90-plus days past due.
At its core is a dunning cadence table that maps each aging bucket to a specific play: a friendly reminder three days before the due date, a polite confirmation call at 1 to 15 days past due, a firmer reminder restating terms at 16 to 30 days, an escalation involving the account owner at 31 to 60 days, a formal demand and credit hold at 61 to 90 days, and a final notice with referral to collections or legal beyond 90 days. Each row names the channel and the owner, so no overdue invoice falls through the cracks.
The template also includes a four-phase per-account process, verify before you chase, make contact, escalate with structure, and resolve and learn, plus a collections health check built around the metrics that reveal whether the process is working: Days Sales Outstanding (DSO) and the percentage of AR aged over 90 days. A closing callout makes the key strategic point: automate the early friendly reminders so your team spends its human time only on the accounts that genuinely need it.
What it's used for
Collections is where revenue becomes cash. This workflow is used to recover overdue invoices systematically and to keep AR from silently aging out of collectibility.
- ✓ Running a consistent, escalating dunning cadence so every overdue invoice gets the right action at the right time
- ✓ Recovering the bulk of overdue cash, which is usually forgotten rather than disputed, with low-friction early reminders
- ✓ Assigning clear ownership at each aging stage so nothing falls between billing, AR, and sales
- ✓ Verifying invoices, POs, and unapplied credits before chasing, to avoid chasing money that is not actually owed
- ✓ Reserving harder escalations, credit holds, demands, and agency referral, for the genuinely delinquent accounts
- ✓ Tracking DSO and percent of AR over 90 days to measure whether collections is actually improving
- ✓ Documenting promise-to-pay dates, dispute reasons, and write-offs so the process is auditable and learns over time
Who uses it
Collections spans finance and the customer relationship, so the workflow is built for the whole chain from billing to controller to the account owner.
Context & good to know
The most important insight behind this workflow is that most overdue invoices are not disputes. They are simply forgotten, stuck in an approval queue, or waiting on a missing purchase order. That changes the strategy entirely: a consistent, escalating contact cadence recovers the bulk of overdue cash with almost no friction, and the harder, relationship-straining escalations should be reserved for the small share of accounts that are genuinely delinquent. Treating every late payer as a problem account burns goodwill you do not need to spend.
Days Sales Outstanding is the metric that tells you whether collections is working. DSO equals average AR divided by credit sales, multiplied by days in the period, and you read it against your stated payment terms. A DSO meaningfully above your terms, for example a DSO of 55 on net-30 terms, signals a leaky process or terms that are too generous. Watching DSO alongside the percentage of AR aged over 90 days tells you both how fast you collect and how much cash is silently aging toward uncollectibility.
The verify-before-you-chase step prevents the most damaging collections mistake: chasing a customer for money that is not actually owed, or that they already paid. Before any contact, confirm the invoice was delivered and matches the customer's PO, check for unapplied payments or credits sitting on the account, and confirm there is no open dispute or short-pay reason on record. A single misdirected demand to a good customer can cost more in relationship damage than the invoice is worth.
Recovery rates fall sharply after 90 days, which is why aged AR deserves the most urgent attention and why automating the early reminders matters so much. The friendly reminder sent before the due date prevents more late payments than any escalation after the fact. Logging short-pays and disputes with reason codes lets you separate a process problem, such as consistently bad POs, from a customer problem, such as chronic disputes, and a documented write-off and bad-debt-reserve policy keeps AR stated at realizable value and survives an audit. AR-capable accounting platforms automate the dunning cadence, generate aging reports, and track DSO out of the box.