5 Effective Ways to Handle Late Payments

Late payments are frustrating and can seriously impact your business cash flow. Here are five proven strategies to handle them professionally.

1. Send Friendly Reminders Early

Don't wait until the payment is late. Send a friendly reminder 3-7 days before the due date:

"Hi [Client], this is a friendly reminder that Invoice #1234 for $500 is due on January 15th. Please let me know if you have any questions!"

Most late payments are simply due to oversight, not unwillingness to pay.

2. Follow Up Immediately When Payment is Overdue

On the day after the due date, send a polite but direct follow-up:

"Hi [Client], Invoice #1234 was due yesterday. Could you please confirm when I can expect payment? Let me know if there are any issues."

3. Pick Up the Phone

If email doesn't work after 7-10 days, call them. A phone conversation is harder to ignore and shows you're serious about collecting.

Tips for the call:

• Be professional and friendly
• Assume good intentions initially
• Ask if there's a problem with the invoice
• Offer payment plan if needed
• Get specific commitment on payment date

4. Offer Payment Plans for Struggling Clients

If a valuable client is having cash flow issues, consider:

• Breaking payment into installments
• Extending the deadline with agreement
• Accepting partial payment now, rest later

This maintains the relationship while ensuring you eventually get paid.

5. Know When to Take Stronger Action

After 60-90 days with no response, you may need to:

• Send a formal demand letter
• Charge late fees (if stated in your terms)
• Pause work on any ongoing projects
• Use a collections agency
• Take legal action (small claims court for amounts under $5,000-$10,000)

Prevention is Better Than Cure

Reduce late payments by:

1. Vetting clients before taking them on
2. Requiring deposits for new clients
3. Using clear payment terms
4. Offering multiple payment methods
5. Automating payment reminders

Invoice ASAP includes automatic payment reminders and tracking to help you stay on top of overdue invoices.