By the Aries Team

Accounts Receivable for ContractorsA Practical Collections System

Late invoices strain payroll and purchasing. Here's a practical accounts receivable process for contractors: set terms up front, invoice at the billing milestone, make paying easy, follow a dated reminder schedule, and review your aging every week.

A calculator and pen resting on a printed financial report

The short version: A dependable contractor collections process starts before the invoice is late. Put your terms in writing on the estimate and contract, invoice the moment a job hits its billing milestone, make paying easy, follow a dated reminder schedule, separate disputes from simple delays, and review your aging report every week. Once you connect the systems you already use, Aries can draft the reminders, summarize each account, and flag broken promises so the follow-up actually happens.

You can finish a job, record the revenue, and still struggle to make payroll because the customer's money hasn't arrived.

QuickBooks found that 59% of small businesses had invoices more than 30 days overdue in its 2026 survey, up from 47% the year before. Businesses waiting on unpaid invoices were owed $17,700 on average, and 39% of owners said a single late payment had made it harder to cover payroll or bills during the prior year.

59%of small businesses had invoices 30+ days overdue (QuickBooks, 2026)

$17,700owed on average while waiting on unpaid invoices

48%of home service pros get paid the day the job is done (Jobber)

$280Bestimated cost of slow payments to US construction in 2024 (Rabbet)

Residential service companies often get paid faster than the wider small-business market. Jobber reports that 48% receive payment on the day a job is completed and another 31% within three days. Commercial and industrial work, large projects, insurance claims, and customers with extended terms can still create a painful accounts receivable balance.

The construction payment cycle is a different problem from card-on-completion residential service. Rabbet estimated that slow payments cost the US construction industry $280 billion in 2024. The exact burden varies by contract and project type, but the number reinforces why commercial contractors need disciplined billing and collection workflows.

Set payment terms before the job begins

The estimate, contract, and invoice should tell the same story. Spell out the deposit, progress payments, final due date, accepted payment methods, financing terms, and any late fees allowed by applicable law.

QuickBooks found a strong link between payment terms and overdue balances. Among companies without overdue invoices, 64% required immediate payment; only 34% of companies carrying overdue invoices did the same. Net-30 terms went hand in hand with a higher rate of overdue invoices.

Some customers require longer terms, especially commercial and industrial accounts. Price that delay into the relationship, and decide up front how much credit you can extend to any one customer.

Invoice while the work is fresh

Send the invoice as soon as the job reaches the agreed billing milestone. A technician should be able to finish notes, capture approval, and trigger billing before the day ends.

Delays usually come from missing information. The office waits on part numbers, signed change orders, photos, purchase orders, or a clear description of the completed work. Make those fields part of the closeout checklist instead of chasing them days later.

For residential service, collect at completion when you can. Jobber reports that businesses accepting online payments get paid four times faster than those that don't.

Use a written follow-up schedule

Collections get inconsistent when follow-up depends on someone remembering which customer promised to pay last Tuesday. A simple sequence covers most invoices:

Timing	Action
Before due date	Send a friendly reminder with the invoice and a payment link
Due date	Confirm the invoice is due and offer help with any payment problems
7 days late	Send a direct reminder and ask for a specific payment date
15 days late	Call the customer and write down what they commit to
30 days late	Escalate internally and apply the contract's collection policy

Adjust the timing to your contracts and customer relationships. What matters is consistency: every account should have an owner, a next action, and a dated note.

Separate disputes from delays

An unpaid invoice can mean several things. The customer may have missed the email, dropped it into a slow approval process, disputed the work, lost the payment link, or run short of cash.

Your first follow-up should figure out which one it is. A service complaint belongs in a customer-recovery workflow, a missing purchase order belongs with the account manager, and a customer who keeps breaking payment promises may need reduced credit or payment before the next job. Treating every case as a generic reminder slows down resolution.

Use AI for preparation and prioritization

AI adoption has moved past a small experimental group in home services. Housecall Pro reported that 48% of the 248 home service professionals in its spring 2026 survey were using AI, and 84% of those users expected to increase their use over the following year. That survey doesn't cover the entire trades market, but the same document-heavy collections work shows up in commercial and industrial contracting.

Accounts receivable is a good place to apply it. Aries can draft reminders in your company's voice, summarize an account's history, flag broken promises, and help staff prioritize invoices by age, amount, and customer risk.

Keep people responsible for disputes, legal escalation, payment plans, and the customer relationships that matter most. The system should show the source invoice and the communication history so an employee can verify every message before it goes out.

Automate the pain away.

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Review a short AR dashboard each week

You don't need a complicated finance package to run the meeting. Track:

Total accounts receivable
Current, 1 to 30, 31 to 60, 61 to 90, and 90-plus day balances
Days sales outstanding
Amount promised for the next seven days
Disputed invoices
Largest overdue customers
Invoices missing documentation

Review the list with the people who can clear the blockers. Sales may own a customer relationship, operations may need to close a job out properly, and finance may need to correct an invoice.

Protect cash before the balance grows

Deposits, milestone billing, saved payment methods with proper authorization, financing, and immediate digital payment options all reduce the amount that ever reaches collections. Commercial and industrial contractors can also ask for credit references, verify billing contacts, and confirm purchase-order requirements before mobilizing.

Collections software helps when it turns policy into consistent action, but the business still needs clear terms and the willingness to handle exceptions quickly. If you're still putting the basics in place, our guide on how to start a business in the US covers getting paid and the tools worth using for it.

Frequently asked questions

What is a good accounts receivable process for contractors?

Set terms in writing, collect deposits when appropriate, invoice at the billing milestone, offer convenient payment methods, follow a dated reminder schedule, and review aging every week.

How soon should a contractor follow up on an invoice?

Send a reminder before the due date and follow up again on the due date. The next steps depend on the contract, the customer, the invoice amount, and the reason for the delay.

Can AI handle contractor collections?

AI can prepare reminders, summarize history, and prioritize accounts. People should review the messages and handle disputes, negotiated payment plans, legal escalation, and sensitive customer relationships.

Sources

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