How to Collect Money from Clients Who Won't Pay

Key Takeaways

• Most late payments result from lost invoices, cash flow problems, or disputes rather than intentional avoidance
• Start with polite reminders and phone calls, then escalate to formal demand letters with specific deadlines and consequences
• Prevent non-payment upfront by requiring deposits, setting clear payment terms in contracts, and using invoicing software with reminders

When discussing why customers do not respect payment deadlines, it is worth remembering that ensuring the payment of an invoice begins much earlier than after issuing it. Preventive measures are essential for receiving payments on time.

• Why is the client not paying? No money, invoice didn’t arrive, forgot …
• Seven ways to increase the chances of your customer paying on time

Why Clients Don't Pay: Common Reasons

There can be several reasons other than the social consent to ignore original payment terms. Typically, debtors use the following excuses to justify their lack of timeliness.

The invoice did not arrive.

Sometimes it may be the mail system or the mail system to fail … but these will be somewhat isolated cases. To be sure, you can always ask for confirmation of receipt of the invoice on an ongoing basis.

We are currently having financial problems.

If the contractor does not have money, it won’t be easy to get it back. However, it is worth making sure that the debtor does not spend his money on other things, believing that they are not related to his obligations.

We will pay when we receive the money ourselves.

Companies behind with payments often explain that they are behind because someone has not paid them and is waiting for the amount. Here we go back to the vicious cycle we wrote about above. Properly prompt payment requests are the key to success.

We forgot about the invoice.

If the debtor explains this way, it is a clear signal to you that you should increase the intensity of your soft debt collection activities.

We will pay you today.

Some contractors promise payment almost immediately. However, if this is not the case, there is nothing else to do but to keep asking for the debt’s repayment.

The person responsible for payments in the company is on vacation.

If the situation is prolonged and the accounting lady is still not at work, the safest option is to ask a person who is also competent to make payments in the company. It is good contacting the member of the management board or the president to check whether it is just a vacation or whether the contractor plays on time. Staff shortages in the contractor’s company are not your problem.

Seven ways to increase the chances of your customer paying on time

Many factors usually cause the lack of timely payment. It’s hard to predict them all. However, we have prepared a few universal tips that will make it easier for the contractor to develop a payment discipline.

Monitor payments and take care of the correctness of issued invoices.

You already know how important it is. Do not ignore this step and do not make it easier for the contractor to exceed payment terms. Also, read our article on what should be included in a correctly issued VAT invoice.

Take actions within the scope of soft debt collection as soon as possible.

Send requests for payment, make calls, send SMS messages. The sooner you start an accessible collection, the better for you. If it fails and you still need to go to court, it will be much easier to recover a less overdue debt.

Speak directly about the consequences.

An unreliable contractor often does not bother with soft debt collection activities because they mainly consist of a polite request for payment. Do not be shy to tell your client directly that you will not hesitate to go to court, although you care about maintaining good relationships. You can also put the debtor’s details on the debt exchange.

Don’t get put off.

The client promises to pay tomorrow, and yet – does not pay? Call me again. If he deceives you again, go back to point three and remind him of the possible consequences.

Unfortunately, it takes time to introduce payment discipline in a relationship with a given customer. The chances are that in the case of three invoices, you will persistently remind you to pay with all available means – in the case of the fourth, the customer will pay voluntarily.

Be polite but firm.

You cannot be overly aggressive, but at the same time – you have to act with a lot of determination. Focus on explaining to the client that your actions are not aimed against them, but you take them out of concern for your company’s financial liquidity. If the cooperation lasts for many years, you can emphasize the aspects you value not to feel attacked in every field. At the same time, however, keep reminding you that getting paid on time is key to maintaining this cooperation and avoiding unpleasant consequences in court.

Set up a procedure to deal with delays.

If you don’t have to think about what to do when the customer is not paying, you will save a lot of time. The procedure may include, among others suspending cooperation with an unreliable contractor. Often this will be enough motivation for the customer to pay on time next time.

Appreciate contractors who pay on time.

If your company can afford to offer a rebate to an honest contractor from time to time, spread the payment into installments, or reward them in some other way – it’s worth trying.

Of course, the above methods do not guarantee 100% success – a lot depends on you and your contractor. However, it is worth implementing them and finding out whether a given contractor will never pay on time … or whether it just needs appropriate motivation.

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• How Much Money Can You Deposit Before it is Reported?
• What Are Integrated Payments?

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• How to Ask for Payment Professionally: With Templates and Examples
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Frequently Asked Questions

How long should I wait before sending an invoice to collections?

Most businesses send a series of payment reminders at 30, 60, and 90 days past due before escalating to a collections agency. After 90 days, the likelihood of collecting drops significantly, so if your own follow-up efforts have not worked by that point, engaging a collections agency or considering small claims court is reasonable. The FTC's guidance on debt collection outlines what collectors can and cannot do if you hire a third party.

Can I charge interest or late fees on unpaid invoices?

Yes, you can charge late fees if the terms were clearly stated on the original invoice or in your contract before the work began. Most businesses charge 1% to 2% per month on overdue balances, and many states have usury laws that cap the maximum interest rate, so check your local regulations before setting your rate.

Should I stop work if a client has not paid previous invoices?

Stopping work is one of the most effective ways to get a non-paying client's attention, and it protects you from accumulating more unpaid debt. Include a clause in your contract that allows you to pause or terminate work if payment is overdue by a specified number of days, which gives you a clear legal basis to stop without breaching the agreement.