Purpose
Get paid for the work you do, on time, without awkward surprises for customers. This procedure sets how invoices are created and sent, how and when reminders go out, and when an overdue account is escalated.
Scope
Covers invoices for products and services sold to customers on [your standard terms, e.g. net 30]. Includes deposits, progress invoices and final invoices. Does not cover refunds or chargebacks, which have their own SOPs, or supplier bills.
Roles and responsibilities
| Role | Responsibility |
|---|---|
| Account owner or project lead | Confirms what to bill and when, handles escalated conversations |
| Bookkeeper or accounts receivable | Creates and sends invoices, sends reminders, matches payments |
| [Finance lead or owner] | Approves credits, payment plans and write-offs |
Before you start
- Access to [accounting or invoicing software] and [CRM]
- The signed contract, quote or order with agreed prices and payment terms
- Proof the billable work or milestone is complete, if billing on completion
- Customer billing contact, billing address and any purchase order number they require
Procedure
- Confirm what to bill. Account owner tells accounts receivable what to invoice within 1 business day of a milestone, delivery or billing date, using [form or CRM stage].
- Create the invoice. Accounts receivable creates the invoice in [invoicing software] with:
- Customer legal name, billing contact and any PO number
- A line for each item that matches the contract or quote
- Invoice date, due date and payment terms
- Payment methods and instructions
- Tax, where applicable, calculated per your jurisdiction’s requirements
- Check it. Accounts receivable compares the invoice to the contract before sending. Invoices over [$10,000] get a second check from [finance lead].
- Send the invoice. Accounts receivable sends it to the billing contact within 1 business day of step 1 and copies the account owner.
- Send reminders on schedule. Accounts receivable sends reminders using the saved templates:
- [3 days] before the due date: friendly reminder with a copy of the invoice
- Due date: payment due today
- [7 days] overdue: overdue notice
- [14 days] overdue: second notice, and a phone call to the billing contact
- Match payments. Accounts receivable records payments against invoices in [accounting software] within [2 business days] of receipt.
- For partial payments, record the amount and contact the customer about the balance.
- For payments you cannot match, ask the customer before applying them.
- Review aging weekly. Accounts receivable runs the accounts receivable aging report every [Monday] and shares anything over [30 days] past due with the account owner and [finance lead].
- Escalate overdue accounts. At [30 days] past due, the account owner calls the customer to understand the delay and agree a date. At [45 days], [finance lead] decides whether to pause further work, offer a payment plan, or take other action allowed by your contract.
- Close out. When an invoice is paid in full, accounts receivable marks it paid. When [finance lead] approves a write-off, accounts receivable records it with the reason.
Checklist
- Billing confirmed by the account owner
- Invoice matches the contract, with PO number if required
- Sent within 1 business day of billing confirmation
- Reminders sent on schedule
- Payments matched within 2 business days
- Aging report reviewed weekly
- Overdue accounts escalated at the set points
Exceptions and escalation
- Customer disputes the invoice: Pause reminders, tell the account owner the same day, and resolve the question before chasing payment. Issue a credit note only with approval from [finance lead].
- Customer asks for a payment plan: [Finance lead] approves the terms in writing, and accounts receivable sets reminders to match the plan.
- Change of bank details: If anyone asks you to send refunds to, or expects you to pay into, different bank details, confirm by phone using a number you already have on file. Never act on an emailed change alone.
- Collections agency or legal action: Only [owner] decides this, after reviewing your contract and any rules that apply where the customer is.
Records to keep
- Invoices, credit notes and payment records in [accounting software]
- Contracts or quotes each invoice is based on, linked from the invoice
- Notes of calls and agreements about overdue accounts, in [CRM]
Keep financial records for the period your jurisdiction requires.
Review
[Finance lead] reviews this SOP every 6 months, and whenever payment terms, invoicing software or reminder templates change. Check the aging report trend at each review to see whether the reminder schedule is working.