How to scale your accounts receivable function

You closed a strong month of sales. You landed new contracts , and the team is excited to onboard new customers. Yet, your bank balance doesn't reflect the momentum. Invoices from this month’s sales (and last month’s) are floating somewhere between "sent" and "paid.” And you’re not sure when to expect payment — especially with a few invoices flagged as “overdue.”

Founders run into trouble when cash arrives late or unpredictably. In scenarios like this, accounts receivable (AR) stops being purely a bookkeeping task and turns into a growth constraint. 

As your business grows from scrappy to structured, AR is one of the first financial functions that needs a real system behind it.

Accounts receivable (AR) is the money your customers owe you based on invoices you've sent. This, for instance, could be for work already completed, a subscription billed upfront, or a milestone payment on a longer contract. 

At the earliest stages, AR is manageable. You might have a handful of invoices and enough bandwidth to track who's paid and who hasn't. But, as revenue grows with more customers and more contracts, your billing complexity also increases. Unmanaged AR can become a direct threat to your runway. Cash flow predictability, hiring timelines, and spending decisions all depend on knowing when your receivables will convert to real dollars.

Accounts payable vs. accounts receivable

Founders often tend to focus on the money going out, such as negotiating vendor contracts, managing burn rate, and watching expenses. That's accounts payable (AP), and it’s how you control the amount of cash you have on hand. 

But accounts receivable is the money coming in. AR is oxygen. If you're only optimizing the spend side, you're neglecting the lever that keeps growth sustainable.

It's worth recognizing the symptoms that your current approach is starting to break:

• Invoices don’t go out on a standard schedule.
• Follow-ups depend on one person remembering to check a spreadsheet.
• Payment terms vary from customer to customer.
• You have no visibility into aging invoices (30, 60, or 90+ days overdue).
• Revenue looks healthy in your CRM, but it’s not reflected in your bank account.

These are common startup growing pains. The question is whether you’ll address it before it starts affecting cash flow — or after.  If two or three of the above symptoms sound familiar, you should look into how to improve accounts receivable processes.

The good news: You don't need a massive finance team to fix your AR process. You can layer in improvements as your company grows. 

Here are a few targeted accounts receivable process improvement ideas that can make a meaningful difference at each stage.

Early stage: Getting the basics right

Consistency goes a long way when you’re in the earliest stages of your company.

Invoicing standards

Standardize your invoice format, line items, and send cadence. When every invoice looks different or goes out on a different timeline, you create confusion for customers and make it harder to track what's outstanding.

Clear payment terms 

Set payment terms upfront — net 15, net 30, or whatever makes sense — and communicate them before work begins. By  establishing payment terms, you have something concrete to reference when following up with your customers.

Basic aging visibility

A simple aging report from your accounting software — which groups invoices by 0–30, 31–60, and 61–90 days — shows you where the risks are before past-due invoices become problematic.

Tip: If you give your customers more options for payment methods (such as credit card, wire, ACH transfer, or ACH debit), you’re more likely to be paid quickly and on time. Payment friction can cause unnecessary delays.

Growth stage: Building repeatable systems

As your customer base and invoice volume grow, you’ll need systems that don't rely on your (or your employees’) memory or bandwidth.

Collections workflows

The single best way to improve the collection of accounts receivable is to remove the guesswork. Define who follows up on overdue invoices, when they do it, and through which channel. A repeatable workflow ensures nothing falls through the cracks.

Communication templates

Create standard messages for AR communication. Send a reminder before the due date, a note on the due date, and a follow-up for overdue accounts. Tone matters here. Reminders should be firm and clear, not adversarial. You have an interest in protecting your cash flow, but also need to preserve your relationships with customers.

Forecast-connected tracking

Connect your AR data to your cash flow forecast. Instead of reacting to what's already in the bank, you can see what's expected to arrive and when. (For example, maybe you’re expecting to receive $50,000 that’s due in the next 30 days.) That way, you can flag any potential gaps before they become a problem.

Scaling stage: Cross-functional visibility and ownership

At the scaling stage, AR may rely on an entire team that needs to work together cohesively. 

Dedicated ownership

Assign AR duties to specific team members. One person (or more) may be responsible for invoicing, while another is responsible for collections and follow-ups. You may also need someone to work directly with customers to answer questions about their invoices. 

Shared visibility 

Give leadership and sales teams access to AR data, including outstanding balances, average days to pay, and collection rates. A customer's payment behavior isn't just a finance issue, it also affects the account relationship and future deal terms.

Exception workflows 

Build approval processes for extended terms, payment plans, or write-offs. One-off decisions can create inconsistency within the AR department.

Tip: Even if you know how to improve the collection of accounts receivable with automated reminders, use your judgment, so you don’t damage your customer relationships. In some cases, a human touch is better.

Automation can eliminate a lot of the manual work that slows AR down. Payment reminders, for example, are often a “quick win” and a core piece of functionality within most invoicing systems. You might also automate invoice generation and delivery, reconciliation, and aging reports. 

The accounts receivable automation benefits are straightforward: faster payments, fewer errors, and better visibility into your cash position. Automation is also one of the best ways to improve accounts receivable collections.

But automation isn’t a “magic switch” that you can just turn on. It requires some time and resource investment to make sure the automation is accurate and matches your company’s workflows. It’s probably not worth the effort if you’re sending five invoices or fewer per month. In that case, stick with a spreadsheet. If you’re sending 50 invoices per month, however, automation potentially pays for itself through cash-flow improvements and time savings. 

Accounts receivable automation for cash flow improvement will only work when built on a solid foundation. If your payment terms or invoicing standards are inconsistent from contract to contract, automation just scales the mess. You’ve got to address the basics of when, how, and under what terms you invoice customers. 

Mercury's invoicing and financial operations tools give founders a single view of money coming in and going out, so AR doesn't live in a disconnected silo.

Should you outsource accounts receivable?

For some startups, accounts receivable outsourcing makes sense. If your team is small and has limited finance expertise, outsourced help can fill the gap. It also frees you up to spend more time working directly on sales or customer activities. 

The tradeoff is that you’ll have less direct control over customer interactions. You’ll want to keep in-house anything that might have an impact on the customer relationship. 

Knowing how to improve accounts receivable is about building financial infrastructure. By applying these tactics, you’ll maintain control over AR as your business grows. 

A well-run accounts receivable function isn't just about getting paid faster. It's also about having a reliable view of your cash position. That information feeds into every decision you make as a founder — and it can be the difference between making a big business bet and holding back until your cash position stabilizes. 

When AR data is clean and current, your cash flow forecast will reflect reality, instead of assumptions. Scalable AR and automation systems let your business move forward with a clearer picture of when cash will arrive.