AP and AR workflow problems in growing service businesses
Accounts payable (bills you owe) and accounts receivable (money owed to you) are where cash timing is won or lost. Small workflow gaps here add up to late payments, slow collections and an owner stuck approving everything.
Receivables: the gap between work and cash
Common issues include invoices sent days or weeks after work is delivered, unclear payment terms, no regular follow-up on overdue invoices and no single view of who owes what. Each one stretches the time from work done to cash received.
Payables: approvals and timing
Bills arriving by email to different people, approval happening in conversation and payments made whenever someone remembers lead to missed due dates or paying too early. A single intake point and a regular payment run usually help.
Signals worth tracking
Average days to collect, the share of invoices overdue, and how many bills the owner personally approves each month are simple measures that show whether the workflow is improving.
What to check
- Days from work completed to invoice sent
- How overdue invoices are followed up
- Where bills arrive and who approves them
- How often payments are run
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Frequently asked questions
Should the owner approve every bill?
Many owners set a threshold and approve only above it, with a named manager below. The right threshold depends on the business.
Is this finance operations guide advice?
No. Sam's List writes these guides for education. They describe common questions and processes, not advice for your specific situation.
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