When Your Customer's 'Net 30' Actually Means 'Net 60'

Here's something your AR team already knows but your ERP doesn't: invoice terms are fiction.

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That customer marked "Net 30" in your system? They've paid at 55 days for the last eight invoices. The one with "Net 45" terms? They're like clockwork at 28 days. And that high-value account you've been aggressively chasing since day 31? They always pay—you're just annoying them.

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Most AR automation treats all Net 30 customers the same: reminder at day 7, escalation at day 30, urgent notice at day 45. It's logical, systematic, and completely divorced from reality. According to recent industry data, 55% of all B2B invoiced sales in the U.S. are currently overdue, and companies offering Net 30 terms typically experience DSO of 35-40 days—17% beyond stated terms. When Net 60 terms are offered, actual DSO balloons to 68-75 days, up to 25% past terms.

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The result? Your collections team wastes hours sending premature reminders to customers who will never pay early, while missing the critical signal when a reliably-slow payer suddenly gets slower. You're annoying good customers and letting bad situations deteriorate.

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It's time to automate around actual payment behavior, not the aspirational terms printed on invoices.

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The Fiction of Invoice Terms

Let's start with an uncomfortable truth: payment terms have always been more aspiration than prediction. Research from Alternative Payments shows that companies without AR automation see invoices paid an average of 28 days past due date, while even those with basic automation still see 23-day delays.

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According to Atradius, only 42% of invoices are paid on time. Half are overdue, and 8% become bad debt. The median DSO across industries is 56 days, but that aggregate number masks enormous variation in actual payment patterns—both between industries and between individual customers within your own AR portfolio.

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Consider what this means in practice:

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The "Reliable Slow Payer": You have a customer that consistently pays at 52-55 days, regardless of their Net 30 terms. They're not delinquent by their own standards—they're processing invoices through a quarterly AP cycle. Sending reminders at day 7, 14, and 30 doesn't accelerate payment. It just creates noise.

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The "Always On Time": Another customer pays at 28 days like clockwork. They're processing your invoice the moment it hits their inbox. The reminder email you sent at day 7 was unnecessary. The one at day 14 was redundant. You're training them to ignore your communications.

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The Deteriorating Account: Most concerning is the customer who used to pay at 35 days but is now at 65 days. This is a signal—potentially a credit issue, a dispute, or a relationship problem. But if your workflow treats them the same as the reliable 55-day payer, you miss the early warning.

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One-size-fits-all collections workflows can't distinguish between these scenarios because they're built around invoice terms, not customer behavior.

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The Cost of Treating All Customers the Same

When you apply uniform collections workflows across diverse payment behaviors, you create two distinct problems:

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1. Reminder Fatigue with Good Customers

Every unnecessary reminder email chips away at customer goodwill. Your 28-day payer doesn't need a courtesy reminder at day 7. They already have your invoice in their system. That reminder isn't helpful—it's annoying.

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Over time, customers learn to ignore your automated emails. Then when you actually need to get their attention—say there's a legitimate issue or an unusual delay—your message gets lost in the noise you've been creating for months.

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This isn't just about customer satisfaction. It's about collection effectiveness. When customers tune out your communications, your actual collections issues become harder to resolve.

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2. Late Intervention with Problem Accounts

On the flip side, applying patience to everyone means you're slow to act when something changes. If your workflow waits until day 45 to escalate, but your customer historically pays at 30 days, you've wasted two weeks.

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By the time you notice a pattern shift—a previously reliable payer now consistently late—the underlying issue may have worsened. Perhaps they're facing cash flow problems. Maybe there's a dispute you don't know about. The longer you wait to engage, the harder the collection becomes.

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According to 70% of finance leaders surveyed, DSO is their primary cash flow challenge. Yet most are using workflows that can't adapt to individual customer payment patterns.

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Building Behavior-Based Workflows: The Foundation

Smart AR automation starts with historical payment analysis. Before you can build customer-specific workflows, you need to understand each customer's actual payment window.

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Analyzing Payment Patterns

Pull 6-12 months of payment history for each customer and calculate:

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Average days to payment from invoice date
Payment consistency (standard deviation from the average)
Trend direction (are payment times increasing or decreasing?)
Seasonal patterns (do they pay slower in certain quarters?)

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In Centime, this data is surfaced in your Receivables Dashboard, which tracks payment history alongside current aging buckets. You can view customer-level metrics that show not just what's currently overdue, but historical payment velocity.

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Distinguishing "Reliably Slow" from "Deteriorating"

This is the critical distinction your workflows must make:

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Reliably Slow: A customer with Net 30 terms who consistently pays at 53-57 days over the past year. The pattern is stable and predictable. These customers aren't becoming a credit risk—they're just processing on their own timeline.

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Deteriorating: A customer who paid at 30-35 days for six months, then shifted to 45-50 days, and is now at 65+ days. The pattern is changing, and not in your favor. This requires immediate attention.

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The difference is in the variance and trend, not just the absolute number. A customer who has always paid at 60 days is fundamentally different from one who just started paying at 60 days.

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Creating Customer Segments

Based on historical behavior, you can create segments such as:

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Express Payers (consistently pay 0-7 days early)
On-Time Payers (consistently pay within stated terms ± 5 days)
Predictable Slow Payers (consistently pay 15-30 days past terms)
Extended Processors (consistently pay 30-60 days past terms, but stable)
Deteriorating Accounts (payment window increasing over time)
Erratic Payers (high variance, unpredictable)

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Each segment needs a different collections approach.

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Building Customer-Level Workflows in Centime

Centime's platform allows you to move beyond one-size-fits-all collections through customer-level workflows that trigger based on actual customer behavior rather than generic invoice age.

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Setting Up Behavior-Based Automation

In Centime, you can configure automations that combine:

Events: The trigger (e.g., "Invoice is X days past due")
Conditions: Additional filters (e.g., "Customer Outstanding > $5,000")
Actions: The response (e.g., send specific email template, assign task to collections team)

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The key is customizing the trigger timing based on customer segments. Here's how:

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For Express/On-Time Payers:

First Reminder: Day 35 (5 days past their typical 30-day payment)
Escalation: Day 40 (this is a strong signal something's wrong)
Tone: Concerned and helpful ("This is unusual—is there an issue we can help resolve?")

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For Predictable Slow Payers (52-day average):

First Reminder: Day 55 (only when they exceed their pattern)
Escalation: Day 65
Tone: Friendly and transactional ("Your invoice is ready for payment")

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‍For Deteriorating Accounts:

Immediate Alert: As soon as payment exceeds historical average by 7+ days
Escalation Path: Assign directly to senior collections or AR manager
Approach: Phone call, not just email

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Practical Configuration Example

Let's walk through setting up a workflow for "Predictable Slow Payers" in Centime:

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Navigate to Settings > Receivables > Workflows > Customer Segment Workflows
Click + ADD NEW
Select Campaign Type: Customer Level
Set Frequency: Weekly (to check customer balances)
Define Conditions:
- Outstanding >= $500 (ignore small balances)
- Overdue >= 55 days (aligned to their payment pattern)
Select Action: Reminder Email
Customize the template tone to be friendly and patient
Add a second condition for day 65 with escalated messaging

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Centime allows up to 100 automations per workflow, so you can create nuanced escalation paths with multiple touchpoints calibrated to each segment.

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Using Hierarchy Preferences for Complex Structures

For customers with parent-child billing structures, Centime's hierarchy preferences ensure communications are consolidated at the appropriate bill-to level. You can set global defaults and override them for specific customers, ensuring that:

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Invoices for child entities roll up to parent communications
Payment portal access is granted at the right organizational level
Collection workflows respect the actual payment decision-maker

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This prevents the common problem of sending duplicate reminders to different parts of the same organization.

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Workflow Examples: From Theory to Practice

Here are five specific customer personas with corresponding workflow configurations:

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Persona 1: "The Quarterly Processor"

Profile: B2B services client with $25K average invoice, Net 30 terms, consistently pays at 52-55 days

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Why They're Slow: They process payables on a quarterly close cycle, not continuously

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Workflow Configuration:

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No reminders before day 50
Day 52: Friendly heads-up ("Your Q1 invoices are ready for processing")
Day 60: Follow-up ("Checking in on your Q1 payment batch")
Day 70: Escalation to account manager
Tone: Professional, transactional, no urgency

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Centime Setup:

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Event: Invoice 50 days past due

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Conditions: Customer segment = "Quarterly Processor"

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Action: Send "Quarterly Reminder" template

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Persona 2: "The Perfect Payer"

Profile: SaaS subscription client, $3K monthly recurring, Net 30 terms, pays at 27-29 days like clockwork

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Why They're On Time: Automated payment systems, strong vendor relationship

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Workflow Configuration:

No proactive reminders (they don't need them)
Day 35: Automated courtesy check-in (because this is unusual)
Day 37: Personal call from AR manager (something's wrong)
Tone: Concerned and helpful

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Centime Setup:

Event: Invoice 35 days past due

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Conditions: Customer segment = "Perfect Payer"

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Action: Assign task to AR Manager + Send "Is everything okay?" email

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The key insight: When your best payers are late, don't wait. It's a signal.

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Persona 3: "The Slow But Growing"

Profile: Manufacturing client, started at $5K monthly but now at $50K monthly, payment window was 35 days, now creeping to 45 days

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Why They're Slowing: Growth outpacing their AP processes

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Workflow Configuration:

Proactive outreach at day 30 (before they're even late)
Day 40: Direct account manager contact
Day 45: Escalation with payment plan offer
Parallel track: Finance team reaches out to discuss terms adjustment or credit line
Tone: Partnership-oriented, problem-solving

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Centime Setup:

Event: Invoice 30 days past due

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Conditions: Customer segment = "Growing Account" AND Outstanding > $40K

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Action: Send "Partnership Check-in" + Assign task to Account Manager + Notify Finance team

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Persona 4: "The Erratic Account"

Profile: Construction client, $15K average invoice, pays anywhere from 25 to 75 days with no pattern

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Why They're Erratic: Project-based cash flow, payment tied to their own receivables

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Workflow Configuration:

Early engagement (day 20) to establish expected payment date
If no response, escalate every 7 days
Track promised payment dates and follow up specifically on those dates
Tone: Firm but collaborative

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Centime Setup:

Event: Invoice 20 days past due

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Conditions: Customer segment = "Erratic Payer"

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Action: Send "Payment Confirmation Request" + Create task to log promised date

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Secondary automation:

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Event: Promised payment date + 1 day

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Action: Send "Following up on your commitment" + Escalate to collections manager

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Persona 5: "The Deteriorating Relationship"

Profile: Long-term client, historically paid at 30 days, suddenly at 60+ days for last three invoices

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Why They're Deteriorating: Unknown—could be financial distress, service issue, new AP contact

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Workflow Configuration:

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Immediate escalation to senior AR manager (day 35, first sign of deviation)
Direct phone contact required within 24 hours
Parallel outreach to account/customer success team
Suspend new orders if pattern continues
Tone: Serious, seeking to understand root cause

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Centime Setup:

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Event: Invoice 35 days past due

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Conditions: Customer segment = "Deteriorating" OR (Historical average < 35 days AND Current DPO > 35)

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Action: HIGH PRIORITY task to AR Director + Email to Account Manager + Auto-hold on new orders

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Escalation Strategy: Timing and Tone by Segment

The cadence and tone of your communications should adapt based on customer segment and deviation from expected behavior.

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Escalation Timing Framework

Low-Risk Segments (Predictable Slow, Quarterly Processors):

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First contact: When they exceed their historical window by 3-5 days
Escalation interval: Every 10-15 days
Phone call threshold: 20+ days beyond historical average

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Medium-Risk Segments (Erratic Payers, New Customers):

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First contact: At historical average or day 30, whichever comes first
Escalation interval: Every 7 days
Phone call threshold: 15 days past due

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High-Risk Segments (Deteriorating Accounts, Previously Troubled):

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First contact: At first sign of deviation from historical pattern
Escalation interval: Every 3-5 days
Phone call threshold: Immediate

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Communication Tone Adjustments

For Reliable Slow Payers: "Hi [Name], your invoice #12345 for $5,000 is ready for payment. As always, let us know if you need anything."

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For Deteriorating Accounts: "[Name], I noticed your last three payments have taken longer than usual—previously you were right at 30 days, but we're now at 55 days on invoice #12345. Is there something we should discuss? I'd like to ensure we're still meeting your expectations and understand if there's been a change in your payment process."

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For Previously Perfect Payers Who Are Suddenly Late: "[Name], this is unusual—invoice #12345 is now 10 days past your typical payment window. I wanted to reach out personally to make sure everything is okay and see if there's an issue we can help resolve."

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The tone acknowledges the relationship history and treats deviation as a signal worth investigating, not just a collections problem.

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Avoiding the "Annoy Good Customers" Trap

One of the biggest risks in AR automation is creating so much noise that customers tune you out. Here's how to avoid it:

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1. Suppress Unnecessary Reminders

If a customer has a payment in process (they've responded to your email, you've logged a promised payment date, or they've accessed the payment portal), suppress automated reminders. In Centime, you can use task assignments and customer notes to pause workflows temporarily.

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2. Consolidate Communications

Instead of sending individual invoice reminders, batch communications for customers with multiple open invoices. Centime's customer-level workflows allow you to send a single monthly statement that includes all outstanding items, rather than bombarding the customer with individual invoice alerts.

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3. Respect Payment Methods

Customers on autopay or recurring ACH don't need reminders—the payment is already scheduled. Configure your workflows to exclude customers with active payment automation.

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4. Use Progressive Disclosure

Start with the least intrusive communication (email) and escalate to more personal touchpoints (phone) only when the situation warrants it. Not every overdue invoice needs a phone call.

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5. Test and Refine

Track customer responses to your automated communications:

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Are they replying to acknowledge the email?
Are they making payments shortly after receiving it?
Are they marking your emails as spam?

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If a customer segment consistently ignores your day 7 reminders but pays at day 50, you've learned that the day 7 reminder is noise. Adjust accordingly.

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When to Override Automation

Even the smartest workflow needs manual override capability. Train your team to recognize situations that require breaking from the pattern:

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Red Flags for Manual Intervention

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Sudden payment stoppage from previously reliable customer: Don't wait for the workflow to escalate through its normal cadence. Pick up the phone immediately.
Industry-wide disruptions: If your customer's entire industry is experiencing a supply chain crisis, economic downturn, or regulatory change, proactive outreach is better than automated escalation.
Dispute indicators: If a customer emails questioning charges, the last thing they should receive is an automated "your payment is overdue" email the next day. Pause the workflow until the dispute is resolved.
Relationship events: Major contract renewal, key contact change, service delivery issue—these all warrant pausing automated collections and engaging personally.
Large balance changes: If a customer's outstanding balance suddenly increases 3-4x due to a large project, the automated workflow built for their typical $10K balance may not be appropriate for the new $40K situation.

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Creating Manual Override Protocols

In Centime, train your AR team to:

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Add customer notes that explain why automation was paused
Set task reminders to resume automation if appropriate
Use custom fields to flag accounts requiring special handling
Maintain communication even when automation is paused (customers shouldn't experience silence)

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Measuring Success: Beyond DSO

Traditional DSO is a useful metric, but behavior-based workflows require more nuanced measurement:

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Segment-Level Metrics

Track performance by customer segment, not just in aggregate:

Average days to payment by segment
Variance within each segment (increasing variance suggests the segment definition needs refinement)
Migration between segments (are customers improving or deteriorating?)

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Workflow Effectiveness Metrics

For each workflow and automation:

Trigger rate (how often is it activating?)
Response rate (do customers pay shortly after receiving the communication?)
Escalation rate (how often does it progress to the next level?)
Override rate (how often are humans manually intervening?)

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If a workflow has a high trigger rate but low response rate, it's noise—customers aren't reacting to it. Adjust the timing or messaging.

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Customer Experience Indicators

Email open rates and click-through rates
Payment portal usage
Dispute rate (an increase might suggest your messaging is too aggressive)
Customer satisfaction scores (if you survey customers)

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Cash Flow Impact

Ultimately, behavior-based workflows should improve:

Weighted average DSO (accounting for invoice size, not just count)
Collections efficiency (how much AR work per dollar collected?)
Write-off rate (are you catching deteriorating accounts earlier?)

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Centime's Receivables Dashboard provides real-time visibility into these metrics, allowing you to see which customer segments are trending in the right direction and which need workflow adjustments.

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Implementation Roadmap

Transitioning from generic workflows to behavior-based automation doesn't happen overnight. Here's a practical rollout approach:

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Phase 1: Baseline and Segment (Weeks 1-2)

Pull 12 months of payment history for all active customers
Calculate average days to payment, variance, and trend for each
Create initial segments (start with 4-5, not 20)
Document the defining characteristics of each segment

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Phase 2: Design Workflows (Weeks 3-4)

For each segment, define:
- When the first reminder should trigger (relative to their historical behavior, not invoice terms)
- Escalation cadence
- Tone and messaging strategy
- Manual intervention triggers
Build workflows in Centime using the customer-level workflow and automation features
Set up conditions that map to your segment definitions

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Phase 3: Pilot Testing (Weeks 5-8)

Select 2-3 segments to pilot (ideally ones with clear historical patterns)
Activate behavior-based workflows for those segments only
Monitor closely:
- Are customers responding as expected?
- Are there unintended consequences (angry responses, confused customers)?
- Is the AR team finding the workflows helpful or cumbersome?
Iterate based on feedback

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Phase 4: Full Rollout (Weeks 9-12)

Apply learnings from pilot to remaining segments
Activate workflows across your entire AR portfolio
Establish monthly review cadence to refine segment definitions and workflow triggers
Train AR team on override protocols and exception handling

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Ongoing: Refinement and Optimization

Quarterly review of segment definitions (customers migrate between segments as behavior changes)
Annual review of workflow effectiveness (are your triggers still optimal?)
Continuous testing of messaging tone and timing (A/B test when possible)

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Conclusion

Invoice terms are a useful starting point for payment expectations, but they're a terrible basis for collections workflows. Your Net 30 customer who reliably pays at 52 days isn't delinquent—they're predictable. The one who shifts from 30 to 65 days? That's the signal you need to catch.

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Smart AR automation recognizes this reality and builds workflows around actual customer behavior, not aspirational invoice terms. By segmenting customers based on payment patterns, calibrating reminder timing to historical windows, and escalating only when behavior deviates from the norm, you can:

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Reduce unnecessary communications that annoy good customers
Catch deteriorating accounts earlier, when intervention is most effective
Improve AR team efficiency by focusing their time on genuine exceptions
Preserve customer relationships while protecting cash flow

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The technology to do this isn't theoretical—it's available today in platforms like Centime, which integrate directly with your ERP and allow customer-level workflow customization based on historical payment data, segment rules, and dynamic conditions.

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The question isn't whether you should move to behavior-based AR automation. It's how quickly you can get there.

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Because right now, while you're sending your seventh reminder email to a customer who's going to pay at day 53 anyway, your previously-reliable 30-day payer just hit day 40—and nobody noticed.

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Book a demo of Centime today to learn more.

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When Your Customer's 'Net 30' Actually Means 'Net 60': Automating Collections for Real Payment Behavior

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