An accounts receivable collections policy is a written schedule stating what happens to an overdue account at each stage, who is responsible for doing it, and at what point the account leaves your hands. Its real value is not organization. It is that the hardest decision, when to stop chasing internally, gets made in advance by the business rather than in the moment by whoever feels least comfortable making the call.
Key Takeaways
- A policy sets actions, timing, and named owners for every stage of an overdue account.
- The escalation trigger should be a date, not a judgment call made under pressure.
- Different people should own different stages, since the skills required change.
- Holding further orders is an escalation step, not a last resort.
- Exceptions are fine when someone with authority approves and records them.
- Your outer limit is legal, not operational, and it does not move.
Why a Policy Outperforms Judgment
Most businesses without a written policy are not disorganized. They simply make each decision individually, and individual decisions on overdue accounts are reliably bad ones.
The reason is that everyone involved has an incentive to wait. Sales does not want to damage a relationship. Accounting does not want to be the difficult one. Ownership hopes the cheque arrives next week. Each delay is defensible on its own, and together they produce an account that sat for fourteen months, which is the pattern behind the cost of delaying debt collection.
Writing the ladder down converts accounts receivable management from a series of individual judgment calls into a process, and nobody has to argue for escalating a specific customer, because the escalation was agreed before anyone knew which customer it would be.
The 30/60/90 Escalation Ladder
The structure below is a starting framework. Adjust the intervals to your payment terms and your industry, and keep the principle that every stage has an action, a date, and a person.
| Stage | Action | Owner |
| Before due date | Confirm invoice received and undisputed | AR clerk |
| 1 to 15 days | Reminder with statement attached, note the file | AR clerk |
| 16 to 30 days | Phone call, obtain a specific payment date | AR clerk |
| 31 to 60 days | Escalate to a decision maker, hold new orders | AR manager |
| 61 to 90 days | Formal written demand, involve the account owner | AR manager |
| 90 days plus | Place externally or refer for legal assessment | Controller or owner |
The Pre-Due Stage Does the Most Work
Confirming that the invoice arrived, matched the purchase order, and is not in dispute costs one email and removes a large category of late payment that is administrative rather than financial.
Accounts that go quiet after this check are far more likely to be genuine payment problems, which means everything downstream is aimed at the right files.
Where the Owner Changes, and Why
An AR clerk chasing a payment date is doing routine work. An AR manager holding new orders is making a commercial decision. A controller placing an account externally is committing spend.
Matching the stage to the authority level prevents both failure modes: a junior person quietly extending credit they cannot approve, and an owner personally chasing a small invoice that should never have reached them.
Holding Orders Is the Most Underused Step
Suspending further shipments or service at the 31 to 60 day mark is an escalation in its own right, and it is the one most frequently skipped because it requires someone to propose stopping revenue.
The logic is worth spelling out in the policy. Continuing to supply a customer who is not paying grows the exposure while removing the leverage, since a customer who needs your next delivery has a reason to settle and a customer you have already stopped supplying does not.
Write the hold in with a named approver so it happens automatically rather than requiring someone to raise it. Concentration risk makes this urgent for smaller operations, where small business debt collection exposure is often held in a handful of accounts.
Deciding the Handoff Point in Advance
This is the clause that matters most, and it is the one most policies leave out.
State plainly at what point an account leaves internal collections. Set the number where it fits your terms and your cash position. What matters is that the trigger exists and is specific, because an account without a defined exit stays internal indefinitely.
Two routes exist at that point. Accounts that are behind but still engaged suit early out services, where structured follow-up continues without the relationship damage of a formal placement. Accounts where contact has stopped working belong in third-party collections.
Deciding which route in advance, on defined criteria rather than on how the last phone call felt, is what turns the policy into something that operates.
Building In Exceptions Properly
Rigid policies get abandoned. The fix is to permit exceptions and control them.
Name who can approve a deviation, require it in writing, and put an expiry date on it. A payment arrangement granted in March with no end date is a permanent extension of credit that nobody decided to make.
Record every exception in the same place, and review them together rather than individually. That is the only way to see whether you have a policy with occasional exceptions or a series of exceptions with a policy attached.
The Outer Limit Is Legal, Not Operational
Your ladder can be as patient as you like inside one constraint that does not move.
Alberta’s Limitations Act requires most claims to be commenced within two years of the date the creditor knew or ought to have known it had a claim. Sending reminders does not suspend that period.
Build the limitation date into your aging report as a field, and treat any account inside its final year as requiring a decision rather than another follow-up cycle. A policy that escalates at ninety days will never encounter this problem. A policy that quietly tolerates two-year-old balances will.
What Changes Once an Account Is Placed
Two points worth writing into the policy so nobody has to ask later.
While you are collecting your own debts, you are not operating as a collection agency. The Government of Alberta notes that the legislation does not apply to a business collecting a debt for which it is the original creditor, alongside exemptions for lawyers acting for clients and civil enforcement bailiffs.
Once an account is placed, Alberta’s Collection and Debt Repayment Practices Regulation governs the agency’s conduct, including contact limits and disclosure requirements. Your policy should state that all debtor contact routes through the agency from that point, because parallel contact from the creditor stalls files and creates confusion about who the debtor should be dealing with.
Measuring Whether the Policy Works
Track three things monthly. The percentage of receivables past terms tells you whether the front end is working. The average age at which accounts are escalated tells you whether the ladder is being applied or quietly ignored. Recovery on placed accounts tells you whether the handoff point is set correctly, and consistent client reporting from your agency is what makes that third measure available at all.
If escalations are consistently happening later than the policy specifies, the problem is authority rather than diligence. Someone is overriding the ladder without an exception being recorded, and the fix is a conversation about who is permitted to do that.
Common Questions About Collections Policies
The questions below come up whenever a business puts one in writing.
At what point should I escalate an overdue account?
Whatever point you commit to in advance. The specific number matters far less than having one that is written down and applied consistently across customers.
Who should be making collection calls?
Someone whose job it is, rather than the salesperson who owns the relationship. Salespeople are poorly placed to press for payment from a customer they need to sell to next quarter, and asking them to do both produces neither.
How often should we follow up?
Enough to be present without becoming background noise, and on a defined interval rather than whenever someone remembers. Document each contact so the file shows a pattern rather than relying on memory.
Should the policy be shared with customers?
Your payment terms and consequences of non-payment should be. The internal escalation schedule is for your team.
Does a policy help if we already have aged accounts?
It prevents the next batch and it forces a decision on the current one. Existing aged accounts need triage against their limitation dates first, which is a separate exercise from the ongoing discipline the policy creates.
Set the Handoff Before You Need It
The businesses that recover the most are not the ones that chase hardest. They are the ones that decided in advance when chasing stops, and then did what they said they would do.
If your current ladder ends with an account sitting at 180 days while everyone waits for someone else to make a call, the missing piece is the trigger rather than the effort. Bison Credit Solutions works overdue accounts on a contingency basis, with no charge where nothing is collected, through both early out and third-party placement depending on where the account sits.
Contact Bison Credit Solutions to discuss the accounts already past your escalation point.
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