End-of-Year Accounts Receivable Checklist: Ensuring Financial Stability for Your Clients into the New Year

1. Help Clients Collect Overdue Payments Before Year-End

One of the clients’ biggest challenges at the end of a fiscal year is handling overdue payments. The end-of-year period often brings holiday absences, reduced availability, and a general slowdown in payment processing, which can disrupt cash flow. Common obstacles such as unresolved balances, disputed invoices, and unapplied credits must be addressed promptly to help clients maintain a stable financial position.

Start with an A/R aging review to support clients in tackling these challenges. By working with clients to prioritize high-value outstanding balances, CPAs can identify overdue payments that may be close to becoming uncollectible. Addressing disputed invoices swiftly can help prevent unnecessary delays and keep A/R balances clean as clients enter the new year.

Developing a consistent follow-up schedule is another effective way to keep overdue invoices on the radar, even during the busy holiday season. Encourage clients to refine their follow-up strategy with reminders that balance friendly and firm. With proactive A/R management, clients can mitigate cash flow issues and avoid carrying lingering debts into the new fiscal year.

2. Standardize Invoicing and Collections Communication

Clients who need a consistent invoicing and collections process often face last-minute bottlenecks and unpaid balances that can carry into the next fiscal period. Implementing a clear invoicing schedule and setting expectations around payments are essential for reducing year-end stress and preventing A/R issues from disrupting their financials.

To help clients achieve this, begin by establishing a consistent invoicing cadence. Collaborate with clients to set specific dates for issuing invoices, payment reminders, and overdue notices, creating a reliable billing schedule that clients’ customers can anticipate. A predictable invoicing routine allows customers to plan better and prioritize payments, reducing delays.

It’s also crucial to ensure invoice transparency. Assist clients in designing invoices and communicating payment terms, due dates, and applicable late fees. Providing this level of detail minimizes confusion, making customers more likely to make timely payments. By standardizing the invoicing process, clients can reduce unpaid invoices and lessen the workload on their A/R teams, ultimately improving financial stability as they enter the new year.

3. Encourage Automation for Efficient Payment Reminders

Automated reminders are essential for easing clients’ administrative burden and maintaining consistent payment follow-ups. Resources may be stretched thin in the last few months of the year with holiday schedules. By keeping payment schedules on track, automated reminders help ensure steady cash flow, even when customers may be out of the office or busy during the holiday season.

To support clients in implementing this system, we recommend using A/R software or email automation tools to schedule reminders at crucial intervals. Setting friendly reminders before due dates and follow-up notices after due dates can improve payment response rates and reduce the need for manual outreach. This approach ensures that important reminders are sent reliably, regardless of client availability.

Encourage clients to use customizable messaging within their automated reminders to make each message relevant and effective. Help them create professional, personalized templates matching the payment status, ensuring the tone and content feel appropriate and timely.

4. Guide Clients in Conducting a Year-End Bad Debt Analysis

Conducting a thorough bad debt analysis is necessary as it provides a clearer financial picture and empowers clients to make more informed decisions regarding budget allocation, credit policies, and sales strategies.

To begin, CPAs should work with clients to review aging reports, focusing on accounts that have remained outstanding for over 90 days. This evaluation allows for discussing options regarding these long-standing balances, such as attempts to collect on them, writing off uncollectible amounts, or referring them to a collections agency. Addressing these accounts proactively is crucial for maintaining a healthy accounts receivable portfolio.

Additionally, removing uncollectible accounts from the books enables clients to assess their cash position more accurately. This clarity can be especially beneficial as they prepare for budgeting and financial planning for the new year. By helping clients conduct a bad debt analysis and streamline their accounts receivable balances, CPAs can position them for a stronger financial start and enhance the overall health of their cash flow moving forward.

5. Emphasize the Importance of Clear Client Communication

Effective A/R management relies on consistent and professional communication with customers. Guiding clients on year-end A/R communications involves more than suggesting reminders; it requires understanding the importance of clarity, transparency, and availability in every interaction.

CPAs should encourage clients to structure each message thoughtfully, ensuring that every A/R communication includes essential details such as invoice status, payment options, next steps if payment is not received, and contact information for questions. Additionally, advising clients to offer customer payment portals can expedite their accounts receivable process. Customer payment portals let customers view and pay their invoices. These portals — and their use by consumers — can dramatically impact how current and potential customers view and interact with their business.

By fostering clear and timely communication, clients can strengthen customer relationships and increase the likelihood of receiving timely payments, establishing a more effective A/R framework as they enter the new year.

6. Encourage Clients to Reconcile Unapplied Credits and Overpayments

Only applied credits and overpayments can make clients’ financials manageable, especially during the year-end rush to close the books. Resolving and applying these issues to open balances will help clients present a cleaner financial snapshot.

CPAs should assist clients in identifying any unapplied credits or overpayments in their records and encourage them to contact customers to confirm applications to open balances or issue refunds as necessary. Additionally, minor discrepancies often get overlooked amid daily operations; year-end is an ideal time to address these issues and ensure accurate A/R records.

By implementing these practices, clients can streamline the closing process and better understand their AR balances, facilitating better financial planning for the upcoming year.

Year-End Accounts Receivable Checklist Summary for Clients

Keeping customer accounts paid in terms is a constant labor of love. Still, due diligence, especially at year-end, helps set your clients up for success in determining budgetary needs and setting bad debt allowance, and can also help in decisions regarding product lines and sales strategy. Strong numbers at year-end will also help set the tone for the new year.  Seeing drops in Average Time to Pay, DSO, and the leveling out of cash flow is fantastic, but as much as we love the black-and-white comfort of numbers, the mental benefits of starting the year off on your front foot can also have a profound effect. 

This checklist allows CPAs, accountants, and financial consultants to provide clients with a comprehensive approach to year-end A/R management. Implementing these strategies will help clients close their books confidently, enter the new year with a stable cash flow, and establish a solid financial foundation for future growth.

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Jana Rzezniczek is a seasoned company expert at Invoiced, with more than fifteen years of experience in accounting. She is passionate about customer solutions and is committed to finding and sharing tools to help conquer the growing and changing landscapes within the accounts receivable space.