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At What Point Should You Escalate Overdue Accounts Receivable?

For a multitude of reasons, businesses often have weak accounts receivables policies. The result is that despite generating impressive sales figures, the money just isn’t making it through the door and goods and services are effectively being given out for free.

Make no mistake, overdue accounts cost your business money and they can significantly impair cash flow, placing you at risk of being unable to pay your own debts as and when they fall due. Not having sufficient capital on hand can also prevent you from being able to invest in growth opportunities, increase shareholder payouts, upgrade your equipment or expand into new product areas.

Whilst you can’t force your clients to always pay on time, there are things you can do to increase your chances of recovering overdue debts and make the debt recovery process simpler. One key rule to managing your accounts receivable is knowing when to escalate them.


When Do I Escalate Overdue Accounts?


Don’t escalate too late

As a general rule, the later you leave it to action outstanding balances, the worse your prospects of recovering them. Accounts become difficult to collect after 90 days past their due date and by 120 days, you can kiss your chances of recovery good bye.


Don’t escalate too early

Escalating accounts too early on the other hand, may have the effect of offending or irritating clients. It is therefore preferable to issue an early, friendly follow up for new unpaid accounts. This can offset a variety of innocent causes of late payment such as simply forgetting or failure to receive the account. It also conveys a no nonsense attitude to those clients that like to string out their credit for as long as they can.


Choosing the appropriate time to escalate

If accounts remain outstanding following one or more friendly reminders, escalating them at an appropriate time can expedite debt recovery. While the common practice in each business and industry is different, overdue accounts in excess of 60 or 90 days are generally considered fair game to escalate. A reasonable action may be to send a notice advising that the client’s account will be turned over to debt collectors if payment is not made within 7 days and/or that their services or supply will be suspended. Further escalation such as demands or the institution of legal proceedings may be appropriate for 120 day and 180 day debts.

However, rigid time frames for escalation may not be appropriate for all debtors. A business must also consider how the tone of their collections will impact client relationships. Taking forceful and swift action against a loyal long term client who has otherwise been a diligent and timely payer may irreparably damage business relations. Therefore a business may do well to extend concessions or flexibility on a case by case basis. Accounts staff should be trained to distinguish debtors who are stringing them along and those with genuine reasons for requiring an extension for payment.


Getting your cash collections cycle humming is an efficient way to ensure the continued growth and success of your business. Talk to an expert about how to optimise the revenue your business is collecting today.


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  • I have worked closely with Boston Commercial Services for over twenty years across four different companies and would not work with anyone else in regards to helping me with my outstanding accounts. Whenever I have started a new role, the first thing I am asked is, “How would you go about cleaning up our accounts receivable ledger?” My answer is always the same – “The first thing we need to do is call Boston Commercial Services”.

    Voytek Bradford

    Freedom Foods Group Limited (National Credit Manager)

  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.