Collections Policy Template
A collections policy defines exactly what happens, and when, from the day an invoice falls overdue.
What's included
- How to define a consistent collections cadence
- What each reminder stage should say and when it fires
- How to segment accounts by value and risk
- When and how to escalate an overdue account
- How to log contacts so any team member can step in
7 min read
Why a cadence beats improvising
Most overdue invoices are forgotten, not disputed. A documented cadence removes guesswork by setting out the exact sequence of reminders, calls and letters that follows a missed due date, so calm and predictable pressure replaces the occasional anxious scramble. Customers who can see your reminders are systematic rather than personal tend to pay sooner and stay customers. This template sets a standard cadence for commercial accounts — adjust the timing to your trade and cash-flow needs.
The collections cadence
Adopt this sequence as your default, adapting the days to suit your terms:
- Due date — automated friendly reminder by email with the invoice and a payment link.
- +7 days — firmer email restating the amount, the original due date and accepted payment methods.
- +14 days — phone call to a named contact to agree a specific payment date and method.
- +21 days — written confirmation of any promise, or a pre-demand notice if no contact.
- +30 days — letter of demand stating the consequence of continued non-payment.
- +30–45 days — escalate to external recovery.
Segment before you chase
Not every overdue account deserves equal effort. Sort the ledger so attention flows where it matters: by value, so a single large invoice outranks a dozen small ones; by age, because older debt is harder to collect; and by risk, since a customer who has broken promises before needs closer watching than a reliable payer who is simply late. Working your highest-value, highest-risk accounts first protects cash flow and stops winnable debts ageing quietly into write-offs.
How to use it
Map the stages above onto your accounting system: automate what you can (the due-date and +7 day reminders), and diarise the human steps so a person actually makes the +14 day call. Log every contact, promise and dispute with the date and outcome so anyone can pick up an account without re-treading old ground — that trail also becomes the evidence that moves a file faster once it is referred. Decide your escalation point in advance and hold it: when in-house follow-up stalls, refer a debt to a commission-only agency. Keep your policy and your cadence aligned with the credit control policy template.
Tips
- A written cadence collects more than sporadic chasing.
- Automate early reminders; reserve calls for the human stages.
- Segment by value, age and risk to focus effort.
- Set the escalation point in advance and treat it as a rule.
FAQ
How soon should the first reminder go out?
On or within a day of the due date — a prompt, friendly nudge resolves many accounts on its own.
How many reminders before escalating?
Typically two or three across two to four weeks, then a letter of demand, then referral.
Should the cadence be the same for every customer?
The structure should be consistent; the effort and pace can flex by the account's value, age and risk.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.