chapter Five

Getting Your Invoices Paid On Time

This article is part of our Complete Guide to Invoicing.

You’ve crafted the perfect invoice. It’s professional, clear and concise.

Now… you need to get it paid!

What follows is a list of the best tips and tricks for accomplishing that with as few headaches as possible. And since even the most diligent invoicing processes can fail with certain clients, we’ll explain how to chase down your late payments.

Tips for Getting Paid Quickly

  1. Use tools
    Using an invoicing tool is a great way to stay on top of your outstanding invoices. The system will remind you when an invoice becomes overdue so that you can send out an appropriate reminder letter.
  2. Provide as many payment options as possible
    Make your payment options as easy to access as you can, and make sure your invoice contains any requisite information your client will need to take advantage of your payment options. For example, make sure you include the email address attached to your PayPal account and your physical address for sending paper checks. If you can include links to payment directly inside of your invoice, all the better.
  3. Offer an early payment discount
    You may wish to offer something like 3% off if paid within the first fifteen days after the invoice date. This small carrot can translate to big savings on large accounts and can be a strong motivator for clients to pay early.
  4. Add a late payment penalty
    On the flip side, adding a late payment penalty can motivate those clients that require the stick instead of the carrot. 1.5% interest per month the invoice is late is appropriate. Just make certain to prominently remind your customer of the penalty on your invoice. If they don’t remember the penalty is there it can’t do its job.
  5. Send invoices more frequently
    If possible you should consider invoicing more frequently than once or twice a month. If you use quality invoicing software and you’re good about time tracking you should be able to easily invoice each client directly after their project is complete.
  6. Keep a look out for payment drift
    Sometimes new clients will pay promptly for the first few invoices but then gradually start paying later and later. Friendly reminder letters, or offers to answer questions about their invoice, are a good way to bring them back into line.
  7. Agree upon your terms
    Make sure your payment terms are agreed to in the contract ahead of time. This way there will be no question as to when the invoice is due.
  8. Send reminder emails
    Send a friendly reminder letter a few days before the due date. Unless the client can’t afford to pay then, or has no intention of paying on time, a simple reminder letter is often all it takes to spur them into action.
  9. Do your research
    If you can, pull a credit report on the company or individual you’re dealing with before you start working with them so you can get a sense of their creditworthiness and their payment track record. This can help guide how your structure your payment terms with them. If their record is particularly bad, it may be smart to refuse the work.
  10. Set yourself reminders
    If you don’t use an invoicing tool, use a calendar app or something similar to set up payment reminders when you generate an invoice. Make sure to include the client’s name and the invoice number in the reminder. This way you can easily track when invoices are due and when it’s time to start nudging your client to pay.
    If you have the option to automate your payment reminders, by all means do! If you don’t have to think about sending payment reminders you’ll be freed to think about more important matters. And, most importantly, you’ll know they’re being sent.
  11. Change your payment terms
    Net 30 is the most common payment term, but that doesn’t mean it’s right for you. If you’re trying to get paid quickly you could tighten up your payment window. Try Net 20 or even Net 15. Just be cognizant of your clients. Too tight a payment window might sour the relationship.
  12. Follow up
    Don’t be afraid to chase late payments. You satisfied your end of the contract. It’s perfectly appropriate to expect the client to as well. Taking yourself seriously is the first step to getting paid on time. Pick up the phone if your emails are going unanswered.
  13. Take a deposit
    For larger projects, consider requiring an upfront deposit. Not only does this assure you that, in the event a client doesn't pay you, you at least got something for your efforts, it also tends to engage your client more in the process. They’ll have “skin in the game” as it were. This makes it more likely they’ll continue working with you towards the completion of the project.
  14. Amend your contract
    If you have a difficult client that often doesn’t pay on time, consider amending your contracts to insist that at least partial payment, if not full payment, is made before any deliverables are released to them. It’s not wise to make this a common practice, as it could offend good clients. But it may be a necessity for problematic customers.
  15. Include all the information
    One of the biggest reasons for late payments is uncertainty around the invoice. If clients aren’t sure who it is coming from or what it covers, it’ll likely go to the bottom of the pile. Make sure they’ll recognize your business name and include a detailed list of the charges so there doesn’t need to be additional follow up.
  16. Confirm the details
    If there is anything unusual on the invoice, make sure it is clearly explained. Confirm the client has looked at it and is happy with it when you send it over—don’t wait until the due date to follow up.

How to Chase Late Payments

Once invoices remain unpaid past due date, be consistent and persistent with reminders and follow ups. The longer it remains unpaid, the less chance there is of collecting the debt.

Holly S.,Freelance Accountant

Unfortunately late payments are going to happen no matter how many of these tips you follow (although following all of them should dramatically cut down on the number of late payments you face).

Here are the basic steps you should follow when trying to get delinquent accounts settled:

  • Remind your client
    Once an invoice goes past your initial payment window, send a friendly reminder. Nothing antagonistic. It’s always best at this stage to assume the best of people, that they haven’t paid simply because they forgot or are very busy.

  • Pick up the phone
    If your reminder email doesn’t work it’s time to escalate things to a phone call. Make sure to talk to someone in charge of payments, be that the business owner or their bookkeeping or accounting department if they have one. This should be friendly but firm. Make certain they know you expect payment and confirm with them the date that it will happen.

  • Send a formal request
    If you still haven’t received payment on the agreed upon date then follow up with a formal request. If multiple requests are necessary they should escalate from amicable to firm and serious. You want to make it absolutely clear that you require immediate payment and that their may be consequences if it isn’t made.

    It can be helpful if these formal requests are made using a service like that offered by William & Harricks, who send professional, paper payment demand letters on your behalf. It can be very motivating to a client when they see you’ve enlisted the help of an outside professional to collect payment.

    Also, if you have a late fee as part of your contract, make sure to use it. You don’t have to, and shouldn’t charge it in every case, but if the late payment is getting out of hand it’s a very useful bargaining chip to threaten your grossly delinquent accounts with.

  • Get legal help
    Legal action should be a last resort, as it can be too costly and time consuming to be worthwhile, especially on smaller accounts. You could consider selling your markedly overdue accounts to a collections agency. They’ll give you some percentage of what you’re owed in exchange for the right to try to chase down full payment from your client. You won’t get the full value of your contract, but at least you’ll get something.

Take the emotions out of it. So many times when people are unpaid, they are worried about being perceived as bossy, difficult or concerned about the relationship. You did the job. You get the pay. It's business 101. And by chasing the debt, you're demonstrating you're good at business. By wringing your hands and apologising or worse still, resenting them but still working, you're demonstrating you are not in control of your business.

Bek L.,Freelance Content Marketer

Getting Paid Doesn’t Have to Be Difficult

As long as you're fastidious in your invoicing, and follow the tips we provided above, you can eliminate many of the difficulties faced in getting paid on time.

In most cases your clients want to pay you. But people are people. They can be forgetful and irresponsible. They don’t always do what they say they’ll do. This simply means you need to do their thinking for them. If you start with a strong contract, you keep on top of your invoices, you remind your clients when payment is due, and then diligently and firmly chase down late paying customers, you’ll find that more often than not you’ll get the payment you deserve.

Next chapter

Example invoices

Example invoices

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