The Trade Contractor AR Playbook: Six Moves to Tighten Your Receivables

If you want to reduce the percentage of invoices that go past 60 days in your business, you do not need a software platform. You do not need a new ERP. You do not need a consultant.

You need six operational moves. None of them are exotic. All of them work. Most contractors are running fewer than two of them.

Here is the playbook.

Move 1: Collect a Deposit on Every Job Over $5,000

The single highest-leverage move in contractor AR is to never start work without a deposit. Most contractors know this. Most contractors do not enforce it.

The rule should be simple: any job over $5,000 requires a deposit before materials are ordered or work is scheduled. The deposit amount depends on the trade and the job size, but the floor is usually 25 to 33 percent.

The math is straightforward. A 30 percent deposit on every job covers your hard costs (materials, mobilization) and signals to the customer that this is a real commercial transaction, not a favor. Customers who balk at deposits are signaling something important about their willingness to pay later.

Move 2: Send the Invoice Within 24 Hours of Job Completion

The clock on aging starts when the invoice is sent, not when the work is done. Every day between job completion and invoice generation is a day of free credit you are extending to the customer.

The discipline is: invoice within 24 hours of job sign-off, ideally same day. Most contractors send invoices in batches at the end of the week or the end of the month, which means a job completed on Monday might not be invoiced until Friday or, worse, the 15th of the following month.

Set a hard rule: the invoice goes out within 24 hours, no exceptions. This single change reduces average DSO by 5 to 10 days for most contractors who implement it consistently.

Move 3: Make Payment Frictionless

If your customer has to mail a check or call your office to pay, you are creating friction that delays payment. Modern AR processes include:

• A clickable payment link in every invoice
• ACH payment as a no-fee option
• Credit card payment as a higher-fee option (yes, even if it costs you 3 percent)
• Recurring payment options for repeat customers

The 3 percent processing fee on credit card payments feels like a tax. It is actually a discount on the cost of waiting. Recovering a 60-day invoice costs you far more than 3 percent in carrying cost. Letting the customer pay instantly with a card is almost always the cheaper option.

"Friction in the payment process is interest you are paying on your own receivables."

Move 4: Set Up Automated Aging Reminders, but Do Not Rely on Them

Automated email reminders at 7, 14, 21, and 30 days past due are table stakes. Most accounting platforms, including QuickBooks Online, support this natively. If you are not using it, turn it on today.

The caveat: automated reminders are necessary but not sufficient. They handle the customers who simply forgot. They do not handle the customers who are choosing not to pay, which is the population that needs human contact. By 30 days past due, automation should be supplemented by a real conversation.

Move 5: Establish a Hard Trigger at 45 Days Past Due

At 45 days past due, the invoice gets a personal phone call. Not from the bookkeeper. Not from the office manager. From someone whose job is to handle the conversation.

The call has three goals:

1. Confirm that the invoice was received and is correct
2. Identify any disputes or issues that need resolution
3. Establish a specific commitment date for payment

This call is the single most effective recovery action available to a contractor. It catches the invoice before the 60-day cliff and resolves most issues before they become collection problems. Skipping this call is the single biggest reason contractors end up with aged AR.

Move 6: Hold a Monthly AR Review

Once a month, the owner sits down with whoever owns AR (the bookkeeper, the office manager, or the recovery partner) and walks the aging report line by line. Every account in 60+ days gets reviewed. Every account in 90+ days gets a decision: continue working it, escalate it, settle it, or write it off.

Most contractors look at their aging report once a quarter, feel sick, and move on. The discipline of a monthly review changes that. It forces decisions on aged accounts before they age further. It also creates accountability for the person responsible for AR, because they know they will have to walk through every account every month.

The Implementation

You do not need to do all six moves at once. The recommendation is:

1. Start with Move 2 (invoice within 24 hours). Hardest to fix culturally, highest immediate impact.
2. Add Move 1 (deposit policy) on all new contracts going forward.
3. Implement Move 3 (frictionless payment) within 30 days.
4. Set up Move 4 (automated reminders) in the next billing cycle.
5. Establish Move 5 (45-day call) as a hard trigger going forward.
6. Layer in Move 6 (monthly AR review) as a standing operational rhythm.

Most contractors who implement this playbook see DSO improve by 15 to 25 days within 90 days. Aged AR over 60 days drops by 30 to 50 percent over the same period.

None of it is exotic. All of it is operational discipline. The contractors who do this consistently have cleaner books, better cash flow, and more capital available to grow.