---
title: "Take the AR Test: 12 Steps to Better Accounts Receivable"
description: "How to improve accounts receivable: take the Paidnice 12-Point AR Test to score your process, read what the score means, and follow the next steps for your band."
url: https://www.paidnice.com/blog/12-steps-to-better-accounts-receivable
---

# Take the AR Test: 12 Steps to Better Accounts Receivable

Written by

Denym Bird
Expert verified

Co-founder & CEO of Paidnice

Denym laid out the 12-point AR Test, a self-assessment that scores invoicing, payment terms, reminders, phone follow-up, and dispute handling out of 12, with next steps for each score band.

Reviewed by Ashley Schroder

Co-founder of Paidnice

Updated Sep 28, 2026 · 5 min

## Summary

To improve accounts receivable, automate invoicing and payment reminders, set clear payment terms upfront, make payment easy with multiple options, and track aging and days sales outstanding every week so overdue accounts get followed up before they age further. The free 12-point test below scores your process.

- **The self-check:** The Paidnice 12-Point AR Test scores a business across invoicing, payment terms, reminders, phone follow-up and payment options, then rates the result Early Stage, Improvement Needed or Great.
- **The automation fix:** Paidnice automates reminders, late fees and interest, statements, payment plans and escalation on Xero and QuickBooks Online, closing the gap between invoice and payment.
- **The result:** Paidnice customers see half as many late invoices in the first 30 days.

## Take the Paidnice 12-Point AR Test

**The Paidnice 12-Point AR Test is a free self-assessment that scores an accounts receivable process across invoicing, payment terms, reminders, phone follow-up, dispute handling, and payment options, then rates it out of 12.** Answer the 12 questions in the form, or read them below and give yourself one point for each yes.

1. Is someone in the business responsible for getting invoices paid on time?
2. Do you have a standard process for issuing and following up on invoices? (If it is undefined or ad hoc, that is a no.)
3. Are your invoices sent on time, clear, and easy to understand, with supporting documentation where necessary?
4. Do you measure and track the success of your collections process, so your accounts receivable balance and debt age improve each month? (If nothing is tracked, that is a no.)
5. Do you offer payment terms that are fair and reasonable, clearly stated on every invoice?
6. Do you provide your customers standard business terms, and do they agree to them before work starts?
7. Do you send payment reminders and statements before and after the due date?
8. Do you have up-to-date contact details for your clients, phone and email?
9. Do you call your customers if invoices are unpaid?
10. Do you handle invoice queries and disputes?
11. Do you make it easy to pay you by offering multiple payment options?
12. When payments arrive, do you mark the invoices as paid promptly?

Free: Payment reminder email templatesCopy the reminder emails for before, on and after the due date.

## What does your AR Test score mean?

**A score of 0 to 4 is Early Stage, 5 to 10 means improvement is needed, and 11 to 12 is a best-practice AR process.** The band sets the next step: build the basics, close specific gaps, or automate what already works.

| Score | Rating | What it means |
| --- | --- | --- |
| 0 to 4 | Early Stage | The receivables process is ad hoc or undefined. Consistent, prompt payment needs a process first. |
| 5 to 10 | Improvement Needed | The fundamentals are in place, and a few specific changes will shorten the wait for payment. |
| 11 to 12 | Great | A best-practice receivables process, with automation and incentives as the remaining gains. |

![12-point AR test score bands: 0 to 4 early stage, 5 to 10 improvement needed, 11 to 12 great](https://www.paidnice.com/images/blog/12-steps-to-better-accounts-receivable-card.png)

## Why does each of the 12 steps matter?

**Each of the 12 steps closes a specific gap in the AR process, from who owns collections to how fast a payment gets marked as received.** A no on any one of them is a place a payment can stall.

1. **Designated AR owner:** one named person means accountability and attention on the money owed, instead of everyone assuming someone else is on it.
2. **Standardized process:** a set routine for sending and following up invoices means less manual follow-up and fewer missed payments.
3. **Clear, timely invoices:** an invoice with the due date, the breakdown, and the supporting paperwork leaves no excuse for a late payment.
4. **Measuring success:** tracking the receivables balance and debt age each month shows whether the process is working before cash runs short.
5. **Fair payment terms:** terms stated on every invoice mean every customer knows the due date and what happens after it.
6. **Agreed business terms:** terms agreed before work starts prevent the dispute about terms that otherwise arrives with the first overdue invoice.
7. **Payment reminders:** reminders before and after the due date keep the invoice in front of the customer and cut the number that go overdue.
8. **Updated contact details:** a reminder sent to a former employee's inbox is not a reminder. Current phone and email details put every reminder and statement in front of the right person.
9. **Phone follow-ups:** a call moves larger invoices that emails do not, and it surfaces the dispute or the cash problem behind the delay.
10. **Handling queries and disputes:** a query answered the same day keeps the payment moving. A query left open becomes a reason not to pay.
11. **Multiple payment options:** card, bank transfer, and direct debit each remove a reason to delay. The Paidnice payment portal takes card, ACH, BACS, and Stripe direct debit, for one invoice, several, or the whole balance.
12. **Prompt payment recording:** marking payments as received the day they land keeps the balance right and stops reminders going to customers who have already paid.

## What should I do if I scored 0 to 4?

**A 0 to 4 score means the basics are missing, so the priority is assigning someone to own AR and building one standard invoicing process before anything else.** Three steps, in order:

1. Assign an AR owner and write down one standard process for issuing and following up invoices.
2. Build a clear invoice template with payment terms stated on it.
3. Set up a simple system for tracking payments and following up overdue invoices, starting with the aged receivables report.

## What should I do if I scored 5 to 10?

**A 5 to 10 score means the fundamentals exist but specific gaps are costing time, so the priority is finding those exact gaps and automating the reminders and tracking around them.** Three steps, in order:

1. List the questions you answered no to and fix them in the order they appear in the test.
2. Move reminders, statements, and tracking into [accounts receivable software](https://www.paidnice.com/accounts-receivable-software) so they run on a schedule.
3. Review the payment terms and payment options on the invoice, so paying is the customer's easiest choice.

**Automate reminders and add a late fee.** Businesses that run reminders and late fees together have a DSO of about 27 days. With no automation switched on, DSO is about 39 days.
Original dataSource: our analysis of invoice data from over 1,000 Paidnice customers. See how to reduce DSO, measured.

## What should I do if I scored 11 or 12?

**An 11 or 12 score is a best-practice AR process already, so the priority shifts to advanced automation and incentives rather than fixing basics.** Three steps, in order:

1. Automate the remaining manual steps: late fees and interest, payment plans, and escalation to a named person.
2. Offer an early payment discount to pull payment ahead of the due date.
3. Review the process each quarter against the aged receivables report to hold the standard.

## What are quick accounts receivable process improvement ideas?

**Quick accounts receivable process improvement ideas start with automating reminders, offering more payment options, and sending a regular statement of everything owed.** Add a late fee or interest charge with clear payment terms stated up front, and review the aged receivables report every week to catch invoices ageing toward bad debt.

The weekly review needs a report that sorts the balance by age. Paidnice's Aged Receivables report splits every unpaid balance into four buckets, 1-30, 31-60, 61-90, and 90+ days, by contact, with outstanding and overdue totals and unpaid counts, so the review is a read of one screen rather than a spreadsheet exercise. For a ranked action list with a late-payment cost table, see [Customers keep paying invoices late: what to do, in order](https://www.paidnice.com/blog/customers-paying-late-what-to-do).

**Ready to take your AR process to the next level?** [Paidnice](https://www.paidnice.com/) automates the reminders, late fees, statements, and escalation this test just asked about, on Xero and QuickBooks Online. Customers see half as many late invoices in the first 30 days, and 8 in 10 invoices are paid within the first 60 days of using Paidnice. Sign-up is free with no credit card, and the first 20 actions are free.

## Paidnice features in this article

- [**Email and SMS reminders** Sends reminders by email and SMS on your schedule, each with a link to pay.](https://www.paidnice.com/email-sms-reminders)
- [**Customer statements** Sends branded customer statements on your schedule, with one button to pay.](https://www.paidnice.com/automated-customer-statements)
- [**Late fees and interest** Adds late fees and interest to overdue invoices when you turn them on.](https://www.paidnice.com/late-fees)

## About the editorial team

Written by Denym Bird Co-founder & CEO of Paidnice

Denym started Paidnice in 2022 after customers paying late left his own business short on payroll. He has led it to $1 billion collected on time across more than 1 million invoices, and writes about credit control, late fees and getting paid on Xero and QuickBooks.

Reviewed by Ashley Schroder Co-founder of Paidnice

Ashley is a co-founder and lead developer of Paidnice and has built accounting software for more than 10 years. He builds the ledger connections that put reminders, late fees and payments into Xero, QuickBooks and ERPs such as NetSuite and Business Central. Before Paidnice he co-founded A2X, ecommerce accounting software for Xero and QuickBooks.

### Try Our Free Accounts Receivable Calculators

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