#Finances #Playbook

Late client payments are more than just a nuisance — they’re a threat to cash flow, growth, and long-term survival. Even if your business is profitable on paper, unpaid invoices can leave you scrambling to cover payroll, rent, or supplies.

What You Can Do About It

Here are a few practical ways to reduce late payments and protect your cash flow:

Step 1: Set Strong Payment Terms

• Use clear terms like Net 15 or Net 30, not vague language like “due upon receipt”
• Define late fees or penalties in your contracts
• Always use written agreements (no exceptions)
• Include scope of work, timelines, and payment milestones

Step 2: Invoice Immediately and Correctly

• Send invoices as soon as work is completed or milestones are met
• Ensure each invoice includes:
• Invoice number
• Due date
• Itemized services/products
• Total amount
• Payment methods
• Your contact info

Step 3: Automate Your Invoicing & Follow-Ups

• Use tools like QuickBooks, Xero, Wave, or Zoho to automate:
• Invoice delivery
• Payment reminders (before and after due dates)
• Payment confirmation emails
• Set up recurring invoices for subscription-based services

Step 4: Make Payments Easy

Offer multiple payment methods: ACH, credit card, PayPal, Stripe

Include a clickable payment link in your invoice

For larger clients, offer invoice portals or integrations if needed

Step 5: Follow Up Like a Pro

• Send a friendly reminder 3–5 days before the due date
• If overdue:
• Day 1–3: Send a polite email
• Day 4–10: Follow up with a second notice or phone call
• After 2 weeks: Escalate (late fee, stop work, or collections)
• Stay professional, but firm — don’t let silence go unchallenged

Step 6: Incentivize Timely Payments

• Offer early payment discounts (e.g., 2% off if paid in 7 days)
• Apply late fees after a grace period (e.g., 1.5% per month)

Step 7: Evaluate and Adjust

• Review aging receivables weekly
• Identify repeat late payers and consider new terms or dropping them
• Track days sales outstanding (DSO) to monitor improvements

Key Takeaway

Late payments are preventable. With clear terms, automation, easy payment options, and proactive follow-up, you can take control of your cash flow — and spend less time chasing invoices.