5 Signs Your Accounts Receivable Process is Broken (Checklist)

You don't know who owes you money right now without opening a spreadsheet. Your finance team spends 15 hours per week sending reminder emails. You're writing off bad debt just to avoid the hassle of collecting it.

These are red flags. Your accounts receivable process is broken, and it's costing you money, time, and relationships.

But how do you know for sure? Here's a checklist of 5 signs your AR process is broken. If you check 3 or more items, it's time to fix it.

Sign #1: You Can't See Who Owes You Without Opening a Spreadsheet

The Problem:

Your aging report lives in a spreadsheet. To see who owes you money, you have to:

• Open the spreadsheet
• Sort by due date
• Manually identify overdue invoices
• Cross-reference with your accounting system
• Update the spreadsheet with new information

This is manual, error-prone, and time-consuming.

Why This is Broken:

• No Real-Time Visibility: Spreadsheets are snapshots, not live data
• Manual Updates: Someone has to update the spreadsheet manually
• Error-Prone: Manual entry creates mistakes
• Time-Consuming: Pulling reports, updating spreadsheets takes hours
• No Automation: Can't set up alerts, reminders, or workflows

The Fix:

Modern AR systems provide real-time visibility:

• See all outstanding invoices in one dashboard
• Filter by due date, amount, customer, status
• Set up alerts for overdue invoices
• Automate reminders and workflows
• No spreadsheets needed

Check this box if: You use spreadsheets to track receivables, or you can't see who owes you money without pulling a report.

Sign #2: You're Writing Off Bad Debt Just to Avoid the Hassle

The Problem:

You have invoices that are 90+ days overdue. You know you could collect them, but it would take:

• Multiple phone calls
• Escalation to management
• Potential relationship damage
• Hours of your team's time

So you write them off. It's easier than collecting them.

Why This is Broken:

• Lost Revenue: You're giving up money you've earned
• Process Failure: Writing off debt means your process failed
• Hidden Cost: The "hassle" is actually a symptom of broken process
• Pattern Repeats: If you write off debt, the pattern will repeat

The Fix:

Automated AR processes prevent write-offs:

• Early reminders prevent invoices from becoming bad debt
• Consistent follow-up ensures payment
• Automated escalation handles difficult collections
• No need to write off debt

Check this box if: You've written off bad debt in the last 6 months, or you're considering writing off debt to avoid collection hassle.

Sign #3: Your Finance Team Spends More Than 10 Hours Per Week on Manual Follow-Ups

The Problem:

Your finance team spends 10-20 hours per week:

• Sending reminder emails
• Making follow-up phone calls
• Tracking payment promises in spreadsheets
• Researching which invoices need attention
• Updating invoice statuses manually

This is time that could be spent on strategic work.

Why This is Broken:

• High Labor Cost: 10-20 hours per week = $2,000-4,000 per month
• Opportunity Cost: Team could be doing strategic work instead
• Doesn't Scale: More invoices = more manual work
• Error-Prone: Manual processes create mistakes
• Team Burnout: Constant manual work creates stress

The Fix:

Automated AR processes reduce manual work:

• Automated reminders handle routine follow-ups
• Automated workflows handle escalations
• Team only intervenes for exceptions
• 80-90% reduction in manual work

Check this box if: Your finance team spends more than 10 hours per week on manual invoice follow-ups.

Sign #4: You Don't Know Your DSO Without Calculating It Manually

The Problem:

Days Sales Outstanding (DSO) is a key metric, but you don't know yours without:

• Pulling an aging report
• Calculating it manually in a spreadsheet
• Updating the calculation monthly
• Comparing to previous periods manually

You might calculate it quarterly, or only when asked.

Why This is Broken:

• No Real-Time Visibility: Can't see DSO trends without manual calculation
• Delayed Insights: Only know DSO after the fact
• No Benchmarking: Can't compare to industry standards easily
• Reactive, Not Proactive: Can't act on DSO trends until it's too late

The Fix:

Modern AR systems calculate DSO automatically:

• Real-time DSO calculation
• Trend analysis over time
• Industry benchmarking
• Alerts when DSO increases
• Proactive management

Check this box if: You calculate DSO manually, or you don't know your current DSO without pulling reports.

Sign #5: You Have No System for Tracking Payment Promises

The Problem:

Clients promise to pay on specific dates:

• "I'll pay by Friday"
• "Payment will go out next week"
• "Check is in the mail"

You track these promises in:

• Your head
• Sticky notes
• Email threads
• Spreadsheets

Then you forget to follow up, and payment doesn't arrive.

Why This is Broken:

• No Accountability: Promises aren't tracked systematically
• Missed Follow-Ups: You forget to follow up on promises
• Cash Flow Gaps: Can't forecast cash flow accurately
• Relationship Damage: Broken promises damage relationships

The Fix:

Automated AR systems track payment promises:

• Log promises with specific dates
• Automatically send reminders on promise dates
• Track promise fulfillment
• Improve cash flow forecasting
• Hold clients accountable

Check this box if: You track payment promises manually (or not at all), or you've forgotten to follow up on payment promises.

The Scoring System: How Many Did You Check?

0-1 Items Checked: Your AR process is working well. Keep doing what you're doing, but consider automation to improve efficiency.

2 Items Checked: Your AR process has room for improvement. Consider automation to reduce manual work and improve visibility.

3+ Items Checked: Your AR process is broken. It's costing you money, time, and relationships. It's time to fix it.

What "Broken" Actually Costs You

If you checked 3+ items, here's what it's costing you:

Lost Revenue:

• Write-offs: Varies significantly by volume (could be $5,000-50,000+ per year for many businesses)
• Delayed payments: Lost interest, cash flow gaps
• Uncollected invoices: Money you've earned but haven't received

Labor Costs:

• Manual follow-ups: $24,000-48,000 per year (assuming 10-20 hours/week at $40-50/hour)
• Spreadsheet management: $5,000-10,000 per year (estimated)
• Manual calculations: $2,000-5,000 per year (estimated)
• Total: $31,000-63,000 per year (varies based on your team's compensation)

Opportunity Costs:

• Strategic work not done: Difficult to quantify but significant
• Team burnout: Turnover costs ($15,000-25,000 per replacement)
• Relationship damage: Lost clients
• Cash flow gaps: Emergency financing fees

Total Cost: $36,000-113,000+ per year for many businesses, plus opportunity costs. Your actual costs depend on your volume, team size, and compensation.

The Fix: What Modern AR Processes Look Like

Real-Time Visibility:

• Dashboard showing all outstanding invoices
• Filter by due date, amount, customer, status
• Alerts for overdue invoices
• No spreadsheets needed

Automated Reminders:

• Automated email reminders based on invoice status
• Multi-channel communication (email, SMS, phone)
• Customizable workflows for different scenarios
• 80-90% reduction in manual work

Automated DSO Calculation:

• Real-time DSO calculation
• Trend analysis over time
• Industry benchmarking
• Proactive management

Payment Promise Tracking:

• Log promises with specific dates
• Automatically send reminders on promise dates
• Track promise fulfillment
• Improve cash flow forecasting

No Write-Offs:

• Early reminders prevent bad debt
• Consistent follow-up ensures payment
• Automated escalation handles difficult collections
• No need to write off debt

Your Action Plan

If You Checked 3+ Items:

1. Assess Your Current Process: Document what you're doing now
2. Calculate Your Costs: Add up labor costs, write-offs, opportunity costs
3. Research Solutions: Look for AR automation that fits your needs
4. Book a Demo: See how automation can fix your broken process
5. Implement: Start with the biggest pain points first

If You Checked 1-2 Items:

1. Identify Improvement Opportunities: Focus on the items you checked
2. Consider Automation: Even small improvements can save time and money
3. Monitor Metrics: Track DSO, collection rates, team time
4. Optimize: Continuously improve your process

If You Checked 0 Items:

1. Maintain Your Process: Keep doing what you're doing
2. Consider Automation: Even good processes can be improved
3. Benchmark: Compare your metrics to industry standards
4. Scale: Ensure your process scales as you grow

The Bottom Line

If you checked 3+ items, your AR process is broken. It's costing you money, time, and relationships. But it's fixable.

Modern AR automation can:

• Provide real-time visibility (no spreadsheets)
• Automate reminders (reduce manual work)
• Calculate DSO automatically (real-time insights)
• Track payment promises (improve forecasting)
• Prevent write-offs (collect what you're owed)

The cost of automation ($49-99/month) is a fraction of what broken processes cost ($36,000-113,000+ per year). The ROI is obvious.

Don't let broken processes cost you money, time, and relationships. Fix them.

Checked 3+ items? Your AR process is broken, but it's fixable. CollectLean provides real-time visibility, automated reminders, DSO calculation, payment promise tracking, and prevents write-offs. Book a demo and see how automation can fix your broken process. Start a free 14-day trial and see the difference.