The default policy and its flaw
Standard practice is a ladder: reminder at seven days, call at fourteen, escalation at thirty, ordered by value. It is simple and defensible, and it spends a lot of a small team's time on invoices that would have been paid this week regardless.
Meanwhile an account that has quietly changed behaviour - paying later each month, disputing more lines - waits its turn in the age queue.
What actually predicts payment
Payment behaviour is one of the more predictable business patterns, because customers are consistent. The strongest signals are usually internal and already in your ledger.
- The customer's own payment history - average days beyond terms, and its recent trend
- Whether the invoice has ever been queried or partially paid
- Invoice characteristics - value relative to their norm, whether a PO was referenced
- Whether previous contact was needed, and what worked
- Seasonal patterns in that customer's own cash cycle
External credit data adds something, particularly for newer customers, but for an established ledger your own history is usually the stronger signal.
Prioritise by what changes, not by what is likely
The same distinction that matters in marketing applies here. An account certain to pay on Thursday does not need a call on Wednesday. An account that will not pay whatever you do needs escalation, not another reminder.
| Group | Pays without contact | Action |
|---|---|---|
| Reliable, minor delay | Yes | Automated reminder only |
| Responsive to contact | Only if chased | Priority call - the real value |
| Genuine dispute | Not until resolved | Route to the dispute owner, not collections |
| Serious risk | No | Escalate, consider credit hold |
Separating the dispute group matters more than it sounds. Chasing a customer for an invoice they have queried damages the relationship and does not produce cash.
Relationship cost is a real constraint
Collections differs from most prioritisation problems because the action has a downside. Over-chasing a good customer is not neutral - it irritates people who pay you, and in some sectors it is remembered at renewal.
Build that into the design explicitly: a contact frequency cap per account, and a rule that strategic accounts are routed to their account manager rather than the collections queue.
Chasing someone who was going to pay anyway costs you twice - the time, and the relationship.
Measuring it honestly
Days sales outstanding moves for many reasons, including sales mix and seasonality. Attributing an improvement to the model needs more care than a before-and-after chart.
Where possible, run the new prioritisation on part of the ledger and keep the existing policy on a comparable part for a period. It is the only way to separate the model's effect from a good quarter. Our note on incrementality testing covers the general approach.