A small business’s cash flow is, not surprisingly, dependent on cash. That’s why late-paying clients can be an incredibly frustrating challenge for a small business owner. It not only ties up money you need to pay your own bills — trying to get clients to pay can become a real time drain. In fact, a 2017 study found that small business owners spend an average of 1.3 days a month chasing down money that’s owed to them.
Here are five of the best ways to deal with late-paying clients.
1. Remember That You Deserve That Money
Nobody likes to feel like a pest. Nor do most people enjoy having to ask someone to pay what they owe. That’s why many small business owners can struggle with late-paying clients. After all, when looking to pursue your passion and dreams, hounding people for money probably wasn’t on the top of the list of things you imagined doing. But here’s the thing: Asking people to pay up is part of your business. And one of the most important steps to getting late payers to give you money is adjusting your state of mind.
Always remember this: You should never feel bad asking for money you’re owed. You worked hard for it. You deserve it. They’re the ones who should be feeling bad. Not you. If you have provided a service to a client, it’s no longer their money. It’s your money. Let this thinking become second nature. If you need some help doing that, adopt “I deserve this money” as a motto you silently whisper to yourself whenever you’re about to send a follow-up email. Or, write the words on a sticky note and post it on your computer so you can see it. Soak them in until you never feel bad about following up on money again.
2. Establish Clear Payment Deadlines
One way of contending with late-paying clients is to establish immovable payment deadlines in a contract that clients will sign before you start work. While 60- or 90-day deadlines are common, don’t adopt them just because others do. Determine what deadline you want based on what your cash flow needs are.
Does a 60-day deadline risk throwing off your own monthly payments — whether it’s for rent, cloud storage, or insurance? Then request a 30-day deadline instead. Or even 14 days if that works best for you. Always pick a timeline that suits your business needs. Then make it ironclad in a contract. That is especially important in case — knock on wood — collection services or legal processes become necessary.
Now, it’s worth mentioning what you should do if a prospective client balks at your timeline. First off, this may actually be a useful red flag. But, if you feel the client is legitimate, or worth being flexible for, feel free to negotiate. Just make sure whatever compromise you reach still suits you, and is set in stone with an updated contract.
3. Adopt Early Payment Incentives and Late Payment Penalties
Since we’re talking about contracts, there are several things you can do to discourage — and protect yourself from — late payments. First, consider offering a financial incentive for quick and early payment. If a contract’s payment deadline is 30 days, offer a small discount (up to 5%) for those who pay within 14 days. If you’re hesitant about forfeiting that revenue, think of it like this: That discount is well worth the cash flow peace of mind it provides — plus, you’ve saved the hours you would have spent following up.
The second clause you could put in a contract is a late payment penalty. You’ll have to decide on the percentage and timing, but be careful about going overboard. Penalties can be a double-edged sword. Yes, it’s a means to ensure you’re either paid on time or paid for the inconvenience of having to wait. But it can also instill resentment. Nobody likes being penalized. It’s worth remembering, too, that, ideally, instituting a late payment penalty is meant to be more of a deterrent for anyone to pay late, rather than being an actual penalty you then have to collect.
4. Automate the Invoicing and Follow-Up Process
If you have late-paying clients, you’ll become very familiar with following up. This can be a time consuming chore, and one you don’t really want added to the million balls you’re already juggling as a small business owner. That’s why you should consider using an accounting solution like FreshBooks, QuickBooks, or Xero that can automate invoicing and follow-ups.
Most programs not only send invoices, but they also can be prescheduled to send out reminder emails on late payments. They’ll do what they’re designed to do, which will free you up considerably to focus on more immediate tasks your small business requires. Many accounting programs also allow clients not just to see invoices, but also submit payments.
Consider pairing this tip with setting up additional payment options like PayPal or Bill.com to make it that much easier for customers to act on the reminders they’re getting.
5. Never Get Angry
Considering how dependent your small business is on cash flow, late-paying clients can make it very easy to not just tear your hair out, but also to get angry at them. After all, they’re negatively impacting your business, right? And yet you need to do your best to never unleash your inner Hulk. That anger will only hurt you.
As much as the above tips will help minimize late payments, the truth is that they are a common part of doing business. A Xero study found that more than one-third of customers pay at least two weeks late. So if you get angry every time it happens, you may very quickly burn through clients you don’t want to lose. It’s worth remembering, too, that not all late clients are bad clients. That may sound counter-intuitive, but it’s true. After all, back in the days of video rental, who among us didn’t sometimes bring back a video late — despite the best intentions?
That’s why you need to maintain a cordial relationship with even late-paying clients. Don’t send angry messages. Send friendly and personalized ones. You especially want to do that with clients who aren’t chronically late. You never know what problems they’re dealing with on their end. Maybe their accounting department is undergoing heavy turnover. Perhaps something has gone wrong with their bank. Sometimes two months of late payments can be an anomaly.
If you keep your cool, the patience and goodwill you generate can benefit you greatly once the problems go away and a client becomes reliable again with their payments. They’ll appreciate your understanding, and your business relationship will be deepened.
How about you — are late invoice payments hurting your business? What tips can you share with other small business owners looking to deal with late-paying clients?
I have used a few of these tips such as setting up recurring payments, setting consistent deadlines and having a late fee. I also make sure to send reminders out (emails/invoices get lost a lot by certain clients), and that when I first get their email address, I make sure it’s not their “junk” email (a.k.a. the account they don’t check).
That’s good advice! Thank you for sharing, Valerie!
Thanks for the tips, they are great indeed. I was about to get angry at clients for delayed payments but after reading these tips, I am motivated to do nice follow-ups.
You’re welcome! We’re glad you found the tips useful.
Most of my customers are large and we find that their accounting departments often lose paperwork or our payments get “lost” in their system. Our office manager spends a good deal of time following up on those and it often means that we have to resubmit invoices and proof of delivery. Eventually, they pay.
Our collection struggles are always caused by not policing the credit limit. We have some smaller customers and they run up a big bill which, for some reason, no one caught until it was too late. One of our current collection problems went as follows:
The customer went way past his credit limit and then COVID hit. Originally, we reached out believing that the pandemic would be short lived and told him we would wait until he re-opened his business. As we got deeper into COVID, I would send him emails for no other purpose than just to make sure that he was still around. When we finally opened, I put him on COD terms and asked him to try to make payments towards the outstanding balance. I even suggested $20 per week just to start. He kept buying COD but never made additional payments and continued to blame the pandemic. I then insisted that every time he came to purchase product that he make an additional payment towards the debt but I left it to him to determine how much extra to pay. After 4 months, he had paid the equivalent of $8 per week. I then asked him to sign a payment plan of $125 per week which I thought was very workable and the debt would be paid off in 6 months. He asked me to make them monthly payments of $500 and I agreed. He made one payment and then said that his debit card had been stolen. Finally, he called to place an order and I told him that I was uncomfortable filling the order and continuing to serve him even as a COD customer. It has been 3 months and we have not heard from him. I’m thinking Small Claims court but I am not sure if he is collectable.
Thanks for sharing your personal experience, Phil! We appreciate the comment.
I learned when I owned my own businesses that there really was no upside to collecting money you are owed. It requires action that you do not get paid for and thus developing processes like the ones described is of critical importance in a number of ways. Cash flow is one of the most important ones.
As a coach I always encourage my small business clients that if you are owed money for more than 30 days then you are in another business, the collections business. You need to develop an entirely separate system than you run your primary business on and in-turn change management hats when you switch back and forth between your 2 businesses. Very rarely have I seen anyone make money out of collecting their own debt. Most clients agree they do not want to be in the collections business. Therefore, we design processes and procedures to reduce and perhaps eliminate the need to be in the business.
Thank you for the comment, Richard! We appreciate your insights.
I work mainly with one large company. I didn’t like their 45-day payment deadline, but I’ve adjusted to it. This is good information for the future. Just a word of thanks: This real time and relevant information is excellent. I look forward to more of it. Kudos on a job well done.
You’re welcome, Michael! Thank you for the nice comment.
As mentioned anyone in photo and video business faces this. In my business I certainly have!
I learned to engineer my contract terms and policies to reduce the incidence of this because a collection dispute can destroy a client relationship. I also found that collection problems are far more likely to occur with a business or institutional client than a personal event client (wedding or social event). My most difficult collection issue occurred with a state agency n Maryland. They owned several thousand dollars and I finally collected by elevating the issue in that particular department.
For many products and services I use, I am required to pay at time of order or when the item is supplied. I do that with most clients now, but there are some who have such an excellent track record, and for them I don’t even require a contract and collect on completion.
Thank you for sharing your personal experiences, Mark! We appreciate the comment.
One of the best publications. Thank you for your professionalism and dedication.
You’re welcome, Miguel! Thanks for reading SBA!
We have found that late payments are not always due to customer issues or accounts payable rotating. In some cases the problem is on our end. PO# typo or some other incorrect information on the invoice. Their system might “kick” it back but not always notify the vendor (Which I believe is done purposely for their own cash flow reasons). They put it on their suppliers to submit a correct invoice. That’s why it’s crucial to make sure the invoice goes out correctly the first time and also (for the customers that conveniently do not let us know if there is a problem), verify they’ve received an accurate invoice before waiting 30, 60 or even 90 days after it is due. If that happens, some customers consider the original invoice as non-existent and will start the clock over once they receive the corrected one, thus making their vendors wait an additional x amount of days depending on their payment terms.
We primarily have returning customers, some of which tended to pay late. What worked well for us was writing a letter to include a table where we listed all our invoices, their due dates, the actual payment dates, and the number of days the payments were late. Our message was that due to the negative payment history and in the event of one more late payment, we would require a prepayment for all their orders over the next one year period. We had to practically implement the prepayment schedule for only one customer. The others made their adjustments instantly.
Thank you for the detailed comment!
Do you have a method to put a lien on a business or otherwise require them to pay outstanding invoices?
I recommend speaking to an attorney who specializes in doing this.
I do not see any comments about a late pay that turns into a no pay. Late is one thing, but how long is late? If you wait until they file BK, then according to the amount owed, it might not be worth the effort it takes to collect. There is a time to get diligently legal to collect.
If you’re not seeing any payment after 4 months and you’ve exhausted all your communications then you should send the receivable to a collection firm. But don’t get your hopes up. I’ve been forced to do this a few times in the past 20 years and success rate is low. Even if money can be collected the firm will take a minimum 30% of it.
I am finding it difficult to collect the final balances, and my vendors charge my account immediately upon receipt. Its a final balance as customers are happy with the products I sell and final result, then find excuses not to pay. I am encouraged to sell the materials up front and in full, and have a credit card on file for the final balance.
Best advice I have received on running a small business.
Collections are part of any business, and can be challenging.
As an addition to my business, I am installing a POS credit and debit line to deal with difficult clients.
Thank you for sharing!
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I learned in my photography and video business to be paid on a progress basis, with a retainer (or reservation*) fee with contracting or start of work, major progress (or second installment*) payment along the way, and a final payment upon completion. Starred items * refer to social event assignments. I found more problems with business clients than those with weddings and social events. It is very easy to be pushed to angry exchanges, but I learned to stay cool and make carefully written emails or letters but have the option of a small-claims lawsuit available. I never had to employ that. Having clear written agreements or working understandings go a long way.
Thank you for sharing your advice and insights, Mark!
There is a wealth of great advice below. I can only add that for our company we count on the small percentage of late payers. They’ll owe us money and we won’t hear from them for a few weeks or a few months. But our Acct. Dept person keeps track of all calls made, date, time of day, persons first and last name, etc. and sets up a follow up call/email. That’s critical, because you’re holding people personally accountable. Always be polite and understanding. Anything may have taken place to interrupt cash flow in a company including a death in the family, Covid, an illness, somebody quit, they aren’t getting paid, the list goes on.
Again, credit to the woman in charge of accounting, she’s been told more than once by late payers in the chain at their end “Your the only person that isn’t yelling at me” or “Being nasty, when the money comes in, you’re on the top of the list to get paid, Thank you.” Boom, a check of some amount or all, shows up soon after. You get more flies with honey. The person you speak with, may not be making the decisions on who gets paid and when? They can be your ally. As for late payers being a blessing, we see it as money in the bank. Once they’re late with other sources, they pay us so they can buy from us again. It’s a rotation they play. And 27 years in business, it’s never changed. If they are local enough (a few minutes or a few hours drive or a flight away) depending on what they owe you, pay them a friendly visit. You’d be surprised how they change their tune. You can learn a lot with a visit from your eyes and sometimes, walk away with a partial payment or settle on a payment plan and put them on hold until they’re under X amount of dollars, that works too. “How about 5-10-20 percent of what you owe us each month until it’s paid?” It has worked for us.
You’ll have a customer for life once that client/customer turns their situation around because they know, you’ll work with them or you may never hear from them again because they are embarrassed about what happened and they may be going out of business. There may even be an opportunity there for you? A partial payment is better than nothing from more phone calls and emails, paying a lawyer. It doesn’t always have a happy ending. Gauge what’s best for you and your company. We try to use a tactical approach to their situation, find out why they are late. You may need the clients/customers and their money but at what cost to you? In the future, you can always charge them a bit more for your products or services, once they’re caught up. Sometimes, you just need to pull the plug and walk away, hopefully after you’ve been paid. It’s always a process, it just depends on which process you follow to get your desired result.
Thanks for sharing your experience and insight, Daniel! We appreciate you taking the time to comment!
Daniel, excellent advice. We use something similar to your procedure. Most of our communications with our customers is via email as many are in a time zone when their working day is our sleeping time. On the positive side many of these customers have been with us for 35 years. We are mentioned from time to time in their articles, always in a positive way. That sends new customers our way.
Late payment penalties must be very carefully crafted to be legal under California law. If the penalty is not calculated to fairly represent the actual loss suffered by the vendor in the event of late payment, it is illegal/unenforceable.
Thanks for the insights and comment, Lawrence!
Here is a comment that one of the top cable company executives in the mid 90’s made to me in a business meeting: “ We teach people how to pay by the way we treat them when they don’t.” I will never forget that quote.
Thank you for sharing that quote, Kevin! That’s very interesting to consider!
One of the ways we have helped to tackle this is by enforcing a strict 50% down payment for all private or new clients. While our long-term clients may occasionally pay a bit late obtaining payment on many of our newer clients right of way offsets the problem of late-paying or slow-paying long term clients.
Great insights, Jason! Thank you for taking the time to comment!
We would not hesitate to tell customers that we would stop by; But many are not local and some are not domestic. They are international. So, it’s not easy to stop by. I don’t think they will do this anymore; But, many, many years ago I got so exasperated with a foreign government payment that was running 6 months late, I called my contact at the Dept. of Commerce to complain. They actually sent a courier over to collect a check. He brought the check back within the week!
Thank you for sharing, Joan! We appreciate the comment.
These are helpful for some small businesses. Not ours. What we’ve done, includes sending a note to the “End-User” of the equipment. Then sending another note to the office administrator. It is not unusual for the customer “End-User” to be so anxious to use our equipment they forget the Invoices need to be processed for payment. Also simultaneously, we send the Invoice to the payable department. They are also sent late notices. Sometimes they respond to early payment discounts. When adding a late fee penalty those are ignored. The bill is eventually paid; but, not the late fee charge. We have a few who are consistently late. We keep a record of who they are. The next time they order (they usually do) they are quoted a larger price for the item they wish to buy.
Thank you for sharing your experiences, Joan!
Regarding adoption of late payment penalties: I find that they ignore them. They pay the original invoice regardless of how late the payment is.
I tried offering early payment discounts and in more than one case they paid late AND TOOK THE DISCOUNT! Here’s another thing to worry about – Some companies have simply adopted a policy of only paying net 90 regardless of the terms. 3M sent a letter to their suppliers saying it was necessary to remain competitive. It seems to me that anything past net 60 should automatically convert to a short-term business loan with appropriate terms (8% minimum). Unfortunately it will take legislation to give this any teeth. If that were to happen companies will decry “regulation overreach” while they continue to use small vendors for millions of dollars of interest-free short term loans.
Thank you for the comment, Dan! Those are interesting points!
Something net 60 is worth far more than nothing net 30. I adjust my service rates based on actual payment dates. I have net 30, net 45, & net 60 rates. Many purchasing agents don’t have flexibility.
I have failed to maintain the nice approach, later in life. Why did it seem easier to be nice 10 years ago? It seems the nice approach has made the same customers think it’s ok to be late for 20 years? I think it’s ok to be firm and a little “unhappy” when you have employees to pay, rent, supplies and more.
Thank you for sharing, Joel!
This works every time…..I call my customers who are way past due and leave a voice message followed by an email that I will be in the area next week and WILL BE STOPPING BY your office to pick up a check for the services we provided. In the message I include the date of service and invoice number. Usually I get a response that a check is being processed and I should receive it shortly. No one wants an upset vendor showing up in their office asking for payment. I’ve only had to actually do this once, and they paid onsite.
Thank you for sharing, Joe! That’s useful knowledge!
Great suggestions. Of note, for example, I am an attorney with many clients paying an advanced fee up front (a.k.a retainer), with other clients paying monthly. We tried offering the discount for payments within a few days in full and noted it on our invoices that everyone receives. It worked for some of the monthly people. However, some of the clients with advance fees on accounts wanted the same discount because their bills were paid in full immediately. ARGH. Lesson learned: 1. Don’t put it on everyone’s invoice [as with other messages that go on every invoice] 2. Don’t put it in the Fee Agreement either, for the same reason. Technically, the clients with the advanced fee on their account were correct, they should get the discount as well.
Great insights, Barbara! Thank you for sharing.
The lab I work in recently sent an invoice for testing our lab. The client is upset because they asked us to change something in our results. Our Ethics policy forbids us from doing this. So, this said client is upset and not paying their invoice for the testing that was done. Do you have any suggestions for how to handle this via email?
This is not an email issue – it’s a phone or face to face conversation. You have to together work out this invoice – if there was a miscommunication then your best bet is to split the cost and then you know going forward how to deal with this client.
The original invoice to this client was sent the first week in January. So, after 4-5 emails, and after being 189 days past due, our company decided to take this one off our books, as a loss. At that point, I asked our COO if I could try one more email pointing out, we understand due to circumstances this year, quite a few companies are having a hard time meeting their obligations. I then offered to split the difference if they were able to pay half of the amount. At the end of September, our corporate office received a check for the FULL amount!
I have always said when it comes to collections…”You have to kill them with kindness!” But when I saw the quote that Kevin Forsyth posted, “We teach people how to pay by the way we treat them when they don’t.” I typed that up and posted it on the top frame of my computer. I love this quote!!
I also have a few different email verbiages that I use and I always start my collection email with a Friendly Reminder as the subject. If you haven’t used Quick Parts in Outlook it is a definite game changer. You type up the verbiage one time in an email, highlight it, then click on the Insert tab, go over towards the right side of the ribbon. In the Text section there is a drop down by Quick Parts. Click on that button then go down to Save Selection to the Quick Parts Gallery. Once the Save box comes up, give it a name and hit Save. The next time you want that to be in your email, be sure your cursor is in the body of the email, on the Insert tab again, go to Quick Parts and just click on it, a list will drop down of all the email verbiages you have saved. I also use this for my invoicing! Such a time saver!!
Love this comment and totally agree about taking a positive approach towards collection. Great advice!
I only have 3 consistent clients and the one that brings in the most cashflow is chronically late. Whenever I send reminders they ignore me and can pay up to weeks later. I also set up a contract in which they are allotted 3 times my normal payment period (90 days) as they requested that and I wanted to keep them as a client. Advice?
I have this situation myself. We moved to a “block of time” retainer relationship where we ask our clients to purchase a block (we use a 4 hour minimum, but you can use anything) in advance and then you charge your time in 15 minute increments against the block. No services can be performed without a block. Accept credit cards too.
My experience with this type of client is that you need to control the amount of credit you are granting them (which is actually what you are doing when you let them pay late), as this type of behavior is a sign of financial distress. You may need to have a “Plan B” in case this client files bankruptcy or otherwise becomes insolvent.
I send a letter to remind my customers to pay their tuition for my tutorials. It is usually the one thing that reminds them, and most will pay very soon after receiving my letter.
I find it curious that this article is originally from 2018, updated in 2019 but nothing making reference to the times we are now living in!
Would like to hear about from those who are handling outstanding A/R situations while we’re all dealing with Covid-19 fallout.
I was chasing a 90 day outstanding invoice when the epidemic hit. I left the account alone for 2mths & then sent a polite email understanding that these were difficult times, etc but confirming that we needed to collect on a situation that was dated before our worlds were shuttered. Contact upon contact were then laid off until I think I got as far up the chain as I could with a “we’ll look into it” response. That was weeks ago.
We’re a small business, they’re not.
We have no outstanding A/P & I’m sure they have enough that they might just claim bankruptcy & come out of the ashes as a new entity later.
We’re both in the entertainment industry with no clear date of any normal business for the foreseeable future. I feel like a hamster.
Response from Gene Marks: This is a problem that many small businesses face and it’s not reported on enough. My recommendation is to go on LinkedIn and find the names of every person that would have some involvement in your transaction. Find out their email addresses and email them. In a professional manner, you should make yourself known to all parties involved. The next time you do work with this company – and there’s no reason not to if the work is profitable – then make sure you get some cash up front.
Thank you so much for this article. I’ve been struggling with a client that is always around $3000-$5000 in the hole. As a small business, this greatly affects the cash flow of my business. I hate asking for the money but If I don’t, I’m sure I won’t get anything for a long time. It’s like if I don’t ask, I’m just left on the sidelines. Number 1 and 2 really hit home. Thank you!
We are glad you found this article helpful. Thank you for commenting!
Hi Alexander, excellent article and such an important topic for so many businesses.
Thank you for reading, Stephen!
Is it a good idea to use a financial service, such as Baton Financial, to offset late payments so that there are no cash flow issues? From my interpretation, invoices will go to Baton Financial and they send our clients the invoices. Baton will pay us within 3 days and wait for our client’s payments. Our clients are construction companies who are notorious for waiting 30 to 60 days to pay subcontractors.
This was a great article. We have a picture framing business and most recently have required 1/2 down or payment in full at the time of the order. Our cash flow has improved greatly!
The point I’d like to make is people don’t check their voice mail that often and don’t respond to emails
asking them to pay their bill. I have found texting is the new best way to interact with your customers.
People respond to texting—for both outstanding invoice notifications and that their project is finished
and ready to be picked up. Leaving a voice mail–is like sending a fax–a outdated way of communicating!
Great tip, Steve! Thanks, Elizabeth
I know some who have employed collection agencies or attorneys and had collection costs and interest tacked on to the bill.
you asked: “I wonder if it is worth to sell the account to a collection agency after all the above fails. Any suggestions or advises on this field?”
I’ve worked with collection agencies in the past (and can recommend a few). You don’t “sell” your receivable to them per se. They just go on the hunt. It’s always a last chance, hail mary kind of thing. If you’re sending an invoice to a collection agency then you might as well just write it off. They’ll write a few nasty letters which may scare the customer into paying and that would be money from heaven! The agency will take about 30-40% of what they collect which to me is a good deal because I’ll take whatever money they can shake up at that point! If the agency doesn’t make progress you’ll have to pay them additional if you want to take things to court. I’ve never gone that far.
Hope this helps!
I am self employed but I send my invoices in the third person, company voice. I also send invoices promptly every month with a net 30. I find this separates personable me from my company. I also think it make things more professional looking and my clients respect that. FYI – Quickbooks has several collection templates ranging from polite reminders to pay now! (which I’ve never had to use).
Great article! I wonder if it is worth to sell the account to a collection agency after all the above fails. Any suggestions or advises on this field?
I woul like to see the demand letter of Dennis Seeney too.
In my business of event video and photography or video lab service, most jobs involve a contract and series of payments: (1) an initial non-refundable* reservation fee or service retainer when contracting; (2) an intermediate payment of at least half of the contract amount (so that I have 3/4 on account), and a small final payment on delivery of result. *The non-refundable part is because I turn away all other requests for that date and time; if the cancellation is due to a serious problem like death in family or serious accident, I offer a full refund.
I evolved this over time. At contracting their checkbook is on 101 but after the job, e.g. wedding, it is on 219 and funds may be tight. They are not going to risk losing payments made to date.
My contract also provides that they can be held responsible for collection costs and attorney’s fees.
Most problems in my experience come from commercial and governmental accounts – the latter being the worst. I added a provision that they do not have copyright control unless all payments are up to date.
There are repeat clients for various services where I don’t bother with a contract or initial/intermediate payments unless I have a large outlay for services and materials. I trust them, and they appreciate that.
Thank you for sharing your experience, Mark!
Many of my clients are “cost sensitive” for me that is an easy way to open the subject of a COD discount. It turns the tables from me trying to collect my payment to, I am providing them with a savings.
Just about 50 percent of my clients will jump at the chance to save 10 percent by paying early.
Hanging a reminder sign that payment is due was something I saw at a preschool. When I asked the owner she said it helps.
We are a service business and clients visit weekly. We were dealing with many late payers. We have decreased the late payers to less than 10% by posting a reminder on the door the last week of the month that the monthly tuition is due for the upcoming month. So many clients have thanked me for posting reminder and said it helps. Not to mention it has saved me the time of chasing them down.
For those who still need a reminder on the first week of the month the first sign is replaced with a stronger sign stating tutions is due today to secure your day and time. The posting of the second sign has reduce late payments even further. Thank you for these great articles and all your comments.
I send an email asking for payment status. If I haven’t heard back within 5 business days, I call the person responsible or the Accounts Payable department.
In some cases we have an Admin listed as the main contact. If I receive no response on these accounts, I follow-up with another email and copy the person they report to stating this is a follow-up message and include the initial email. I usually receive payments that same week in these situations.
I too would be interested in seeing a copy of Dennis Sweeney’s “demand letter”. (Dennis Sweeney | May 15, 2018 at 11:05 pm)
@CablingPro: Before paying a lawyer, I’d do the following:
1) Consider following up with a different contact. For instance, if you’ve been dealing with A/P, ask for a supervisor or even the owner. If your current contact is already high on the food chain, reach out directly to the accounting department – they may be the ones who determine a check run in the first place.
2) Mail a copy of the invoice or statement along with a stern – but not nasty – letter via certified mail or similar service that requires a signature. Then you have a paper trail if you ultimately pursue formal collection. Search online for good collection letter templates. Make it as easy as possible for them to pay: include a SASE for their check, or a credit card authorization form with the past due amount clearly stated. Good luck!
What do you do when a client stops returning your calls about overdue invoices and you feel like sending polite emails have reached a point of diminishing return?
Is getting a letter from your lawyer going to motivate the slow paying customer to respond?
Hi Cabling- check out our article here on the 5 Best Ways to Handle a Late Paying Customer: https://sba.thehartford.com/finance/the-5-best-ways-to-handle-late-payments/ as well as our podcast episode on it here: https://sba.thehartford.com/podcast/late-paying-client/
Dennis Sweeney – would you be willing to share a template of your demand letter? SSharp
Our small company will have trouble collecting on occasion. I recently wrote two demand letters. And attached the invoices. They were nicely written and understanding. Both clients paid me within 10 days of the letter.
This is excellent advice and very timely for me. One client is 2 months behind.