Accounts receivable action plan template

Key facts

• The template has 10 stages, from invoice issued (day 0) to collections or legal referral at +90 days.
• A customer gets seven contacts (stages 2 to 8) before the credit hold at +60 days.
• UK businesses can claim statutory interest of 8% plus the Bank of England base rate on late B2B invoices (gov.uk).

The 10-stage collections cadence

This is the core of the template: a repeatable sequence for every invoice. Timing is measured from the due date (day 0), with negative days before it and positive days after. Adjust the intervals and tone to suit your customers.

The overdue tracker

The second tab is a tracker so nothing slips. Each overdue invoice gets a row with its current stage, last contact, any promise-to-pay date, the next action date, an owner, and a status. Work it oldest-and-largest first, because roughly 80% of overdue value usually sits with about 20% of customers.

Example: three overdue invoices in the tracker

Ridge Fabrication holds $15,500, or 52.5% of the $29,500 total, so it gets the first call.

What should an AR action plan include?

A complete plan has three parts: a collections cadence, a tracker and clear escalation rules.

Core components of an AR action plan

Every at-risk invoice in the plan needs five fields:

• Owner: the named person who chases it.
• Next action date: when the next contact is due.
• Status: where the invoice sits in the cadence.
• Escalation trigger: the day count that moves it to the next stage.
• Channel: email, phone or formal notice for the next contact.

How do I reduce days sales outstanding (DSO)?

Invoice immediately and accurately, set short clear terms, offer easy online payment, and follow up on a fixed schedule rather than waiting for invoices to age. Prioritize the oldest and largest balances. Track your progress with the AR turnover ratio, where higher means faster collection.

When should I charge late fees or interest?

Only if your agreed payment terms allow it, and typically from the escalation stage onward (around 30 days overdue). State the late-fee or interest rate on the invoice and in your terms before you apply it.

Who should own collections?

A named person or AR team should own day-to-day follow-up, with a manager owning escalation from the final-notice stage. Keep collections separate from the person who records payments where you can, to maintain segregation of duties. The tracker has an Owner column so every overdue invoice has a clear point of accountability.

How do I prioritize which customers to chase?

Use the 80/20 rule: about 80% of your overdue balance is usually owed by 20% of customers, so chase the largest balances in the oldest buckets first. Pair this plan with an aging report to see that priority order at a glance, then load the top accounts into the tracker.

Can I automate this cadence?

Yes. Accounts receivable software can send the reminders, apply late fees and flag accounts that need a call. See our independent guide to AR software for tools that do this on Xero and QuickBooks.

What mistakes should you avoid with this template?

• Chasing the smallest invoice first. Ridge Fabrication's $15,500 is at 62 days. Past 90 days, collection odds fall below 30%, so expected recovery is under $4,650, not $14,725. Fix: sort by days overdue, then amount.
• Charging a late fee the terms do not state. A 1.5% fee on Northside Dental's $9,800 is $147 the customer can dispute. Fix: put the fee rate on the invoice and in your terms before stage 7.
• Leaving a stage without an owner. If nobody sends Northside's +45 final notice, $9,800 goes 30 days with no formal demand. Fix: give every row an owner and a next action date.

Frequently asked questions

How many times should I follow up before sending an invoice to collections?

This template makes seven contacts (stages 2 to 8) before the credit hold at +60 days. Referral to collections or legal comes at +90 days.

What is the difference between an action plan and an aging report?

An aging report sorts unpaid invoices into 0-30, 31-60, 61-90 and 90+ day buckets. An action plan says who contacts each customer, how and when.

Can I deduct an unpaid invoice as a bad debt?

A business bad debt is a loss from a debt that became partly or totally worthless. The IRS allows the deduction only if the amount was included in your gross income in the current or prior year. Ask your accountant first.

Bottom line: this template suits a small team that wants a fixed follow-up routine in a spreadsheet. Move to accounts receivable software when reminders start going out late.

Last updated September 28, 2026. This guide is general information, not accounting, tax, or financial advice.