What Every Canadian Accountant Should Know About Contractor AR

In Canada, construction firms wait an average of 65 days to get paid. In British Columbia, a 2025 survey by the BC Construction Association found 91% of construction businesses reported late payments at least once in the past year. Most of that money belongs to small sole proprietors: plumbers, electricians, HVAC technicians, and general contractors with no collections department and no time to chase invoices.

They use QuickBooks Online or FreshBooks to run their books. They rely on an accountant or bookkeeper to keep those books in order. And in most cases, their accountant has never touched their accounts receivable process. Relanco was built for exactly this scenario: a bilingual, Canada-first reminder tool that works alongside QuickBooks Online and FreshBooks for Canadian contractors, including those serving Quebec clients. But even before recommending a dedicated tool, accountants have concrete steps they can take today with the software their clients already have. This post covers the specific steps.

The scale of the problem

These numbers are not edge cases. A 2024 Rabbet report found that 82% of Canadian contractors face payment waits over 30 days, up from 49% two years ago. Only 12% of construction businesses report always being paid on time. Construction trade delinquencies rose from 2.9% to 3.3% year-over-year in Q2 2024, according to Equifax Canada.

The most dangerous threshold is 90 days. Research from CGI Credit Guard puts recovery rates below 50% once an invoice crosses that line. A contractor carrying ten outstanding invoices at any given time faces that risk compounding month over month.

ISED data from 2025 shows 99% of businesses in the Canadian construction sector are classified as small businesses. These are not companies with credit managers. They are one-person or two-person operations whose accountant may be their only professional advisor.

Why accountants are the right people to close this gap

The shift toward Client Advisory Services has changed what Canadian accounting firms offer. AR management is not a new service line; it is a natural extension of the bookkeeping and review work firms already do for contractor clients.

Most advisory resources are written for generic SMBs, not trades professionals dealing with progress billing, seasonal work cycles, and clients who routinely test payment terms. When an electrician does not follow up on a 45-day-old invoice because he does not want to damage the relationship with a repeat commercial client, that is an advisor conversation. Accountants who take an active role in their contractor clients' AR process add real dollar value, and the steps below require no new software.

What accountants can do in QuickBooks Online

QuickBooks Online has two underused AR tools that most accountants never configure for their contractor clients: the AR aging report and automatic invoice reminders.

To review outstanding balances, go to Reports and run the A/R Aging Summary. This shows every outstanding invoice grouped by age: current, 1 to 30 days, 31 to 60 days, 61 to 90 days, and over 90 days. Running this monthly and sharing it with the contractor during a review call changes the conversation from "how are things going" to "you have three invoices over 60 days: here is what to do about them."

To set up automatic invoice reminders, follow these steps in the client's QuickBooks Online account:

1. Open Settings (the gear icon) and select Account and Settings.
2. Navigate to the Sales tab.
3. Find the Reminders section and click Edit.
4. Turn on Automatic invoice reminders.
5. Configure Reminder 1: choose the number of days before or after the due date (up to 90 days either direction).
6. Add Reminder 2 and Reminder 3 for escalating follow-ups.
7. Customize the subject line and email greeting for each reminder, then save.

QuickBooks Online checks due dates several times per day and sends reminders automatically to any customer whose email address is on file.

One limitation worth knowing: QuickBooks Online's automatic reminders cannot be turned on or off for individual customers. It is all or none. If a contractor has certain clients where automated reminders would damage a sensitive relationship, they either need to manage those manually or upgrade to QuickBooks Online Advanced, which supports workflow-based reminders with more granular customer targeting.

What accountants can do in FreshBooks

FreshBooks offers similar AR automation through its accounting partner portal, which gives accountants direct access to the client's account. Partners can configure automatic payment reminders to fire before the due date, on the due date, and after the due date, without requiring the contractor to set it up.

Two FreshBooks features accountants tend to skip:

Late fees.FreshBooks lets you add a late fee to past-due invoices, either as a flat dollar amount or a percentage of the balance. For contractor clients dealing with commercial accounts that regularly stretch terms, a late fee clause is a concrete deterrent. The accountant's job is to tell the client it is legal, common in the industry, and worth putting in their standard terms.

Estimate-to-invoice conversion.FreshBooks converts approved estimates into invoices in one click. Contractors who send estimates but delay invoicing after job completion are adding days to their own collection cycle. The accountant can spot this pattern in the client's data and address it in a single review call.

The CASL insight most accountants miss

When contractor clients ask whether they can send invoice reminders by SMS, the most common answer is a vague "check with a lawyer." The actual rule is more useful than that.

CASL (Canada's Anti-Spam Legislation) generally requires consent before sending a commercial electronic message. But there is a transactional exemption: messages sent to complete or confirm a transaction the recipient already agreed to are generally not treated as commercial electronic messages requiring consent. A plain invoice reminder (invoice number, amount owed, due date, payment link) sent to an existing client for work already completed typically falls inside this exemption.

The trap is adding any promotional content. A reminder that includes "while you have our invoice open, ask us about our spring maintenance package" is no longer purely transactional. The entire message becomes a commercial electronic message, and full CASL compliance applies: explicit consent, a physical address in the footer, and a functioning unsubscribe mechanism.

The same logic applies to SMS reminders. Keep the message transactional, and the consent burden is lower. For ongoing client relationships, implied consent under CASL extends up to two years after a transaction. For a full breakdown, see our post on CASL and Law 25 for Quebec contractors.

Keeping reminder templates factual protects the contractor from maximum penalties of up to $10 million CAD under CASL. This is general information; clients with specific compliance questions should consult a legal professional familiar with CASL.

The AR Intervention Ladder

At what point should an accountant move from sending reminders to taking direct action? Recovery rates in the table below are directional estimates from CGI Credit Guard and construction sector benchmarks; they are not regulatory thresholds.

The 90-day mark is where the odds flip. An accountant who runs a monthly AR aging review and flags 60-day invoices is worth months of collection effort after the fact. For a breakdown of escalation options including Quebec's Cour des petites créances, see our post on the invoice reminder sequence that gets contractors paid.

If an invoice reaches the 91-day threshold and the contractor needs to understand their legal options, see our post on when to escalate an overdue invoice to small claims court in Quebec.

Quebec-specific considerations

Contractors in Quebec operate under additional compliance obligations that accountants serving this market need to know.

Law 25.Quebec's Law 25 governs how businesses collect, use, and store personal information. It applies to any organization handling personal information of Quebec residents, including sole-proprietor contractors. Key obligations: written data-handling agreements with any service provider processing client data, a designated privacy officer (which for a sole proprietor can be the owner), and informed consent before collecting personal information. Penalties for non-compliance can reach up to $10 million CAD or 2% of global revenues under administrative orders, and higher in court.

Accountants who help contractor clients set up automated reminder tools should make sure the client has a written agreement with the platform covering how client data is handled. It is a low-effort step that counts as real advisory work.

For the full compliance picture on SMS reminders and data privacy for Quebec contractors, see our post on CASL and Law 25 for Quebec contractors.

TVQ invoice rules. Quebec contractors registered for TPS and TVQ must display both taxes separately on every invoice: TPS at 5% and TVQ at 9.975%, each calculated on the pre-tax amount. The combined rate is 14.975%. Registration is mandatory once annual revenues exceed $30,000 across four consecutive quarters. Since January 1, 2024, all registered businesses except charities must file electronically. Accountants should audit contractor invoices regularly to confirm proper tax display. Informal invoices missing the TVQ line are one of the most common compliance gaps in the trades sector.

OQLF. The Office québécois de la langue française requires that business communications with Quebec residents, including invoices and payment reminders, be available in French. An English-only reminder to a Quebec client is non-compliant. Bilingual templates satisfy this requirement. For contractor clients using automated reminder tools, confirming that French-language templates are active is a basic compliance check.

When the built-in tools are not enough

QuickBooks Online and FreshBooks handle email reminders well for contractors whose clients are mostly email-responsive. The gaps show up when contractors need to reach clients who do not open emails reliably, need per-client control over which reminders fire, or serve a bilingual Quebec market where reminder language has both relationship and compliance implications.

For a deeper look at how the built-in reminder tools in QuickBooks Online and FreshBooks compare on features, see our breakdown of accounting software invoice reminders.

Relanco was built for Canadian contractor clients: bilingual SMS and email reminders, escalating tone from friendly to firm, per-client control, and Law 25 and CASL compliance built into the platform. It connects directly to QuickBooks Online and FreshBooks, so the accountant's existing workflow does not change. The reminder layer runs alongside the accounting software rather than replacing it.

Frequently asked questions

Are invoice reminders subject to CASL?

Pure invoice reminders — invoice number, amount owed, due date, payment link — sent to existing clients for work already completed are generally considered transactional messages and are not subject to CASL consent requirements. The exemption disappears the moment any promotional content is added. This is general information; consult a legal professional for advice specific to your situation.

Can accountants set up invoice reminders in QuickBooks Online on behalf of their clients?

Yes. Through QuickBooks Online Accountant (QBOA), accountants have access to their clients' QuickBooks Online files and can configure automatic invoice reminders in Account and Settings > Sales > Reminders. The reminders then fire automatically based on the due dates in the client's invoices.

What is the AR Intervention Ladder?

It is a decision guide that maps invoice age to recovery rate and recommended accountant action. The key threshold is 90 days: research suggests recovery rates drop below 50% once an invoice crosses that line. Accountants who review their contractor clients' AR aging monthly and flag 60-day invoices proactively can prevent significant write-offs.

What is the difference between CASL and Law 25 for sending payment reminders on a client's behalf?

CASL is federal legislation that governs commercial electronic messages sent to anyone in Canada, including SMS and email. It applies to the content and consent requirements of the reminders themselves. Law 25 is a Quebec provincial law that governs how personal information about Quebec residents is collected, stored, and used. When an accountant helps a contractor set up automated reminders, CASL determines whether those reminders require consent; Law 25 determines whether the platform handling client contact data needs a written data-processing agreement. Both can apply at the same time. This is general information; consult a legal professional for advice on your specific situation.

Can accountants bill clients for AR follow-up as a separate engagement, or does it fall under bookkeeping scope?

It depends on the engagement letter. Standard bookkeeping scope typically covers recording transactions, not actively managing collection timelines. AR advisory work (configuring reminder tools, reviewing aging reports monthly, advising on escalation) is commonly scoped as a separate Client Advisory Services engagement and billed at a higher rate. Defining it explicitly in the engagement letter protects both the firm and the client.

How should an accountant document AR follow-up activity for a client's audit trail?

At minimum, note in the client file: the date the aging report was reviewed, which invoices were flagged, and what action was recommended. If the firm configured or updated reminder settings in QuickBooks Online or FreshBooks, record the settings applied and the date. For clients subject to Law 25 (Quebec residents' data), keep a record of the data-processing agreement with any reminder platform. This documentation protects the firm if a client later disputes a write-off or escalation decision.

Canadian contractor clients need AR guidance as much as they need bookkeeping. The tools are inside QuickBooks Online and FreshBooks already. The accountant's value is in configuring them, watching the aging report, and stepping in before the 90-day line.

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