Handling late payments requires a proactive, firm, and consistent approach: send polite reminders immediately upon the due date, followed by firm phone calls or emails, and escalate with formal late fees or legal action if necessary. Clear, documented payment terms, including penalties for late payments, are essential for prevention.
15 Ideas for Handling Late-Paying Customers
What to do if a customer doesn't pay
Talking Points
When an invoice ticks over the overdue, you need a clear, effective strategy to recover what you're owed without damaging customer relationships.
Aim for a clear and polite tone. Include your branding and the invoice number so it's easy for your client to identify. In a payment reminder email, it's important to be clear and courteous. Mention the overdue balance, invoice number, and due date clearly while being respectful.
10 most common excuses for late payments
The effects of late payments are long-lasting but not permanent. The credit agencies will remove a late payment from your credit reports after seven years. As time goes on, late payments generally have less influence on your credit scores. It's unwise to leave debts unpaid in the hopes that they will disappear.
Subject: [Invoice#123] Past due notice
“Hello [Client], Hope you're doing well. It seems that I've yet to receive payment for [Invoice#123], which was due [date]. I would appreciate it if you could inform me about any changes regarding your payment schedule.
Tips for writing an effective payment reminder email
There are several steps you can take for a client who won't pay:
This step-by-step approach can help you handle these situations:
13 Professional Ways to Remind Someone to Pay You
The 7-in-7 rule (or 7x7 rule) in debt collection, part of the CFPB's Regulation F , limits how often debt collectors can call a consumer about a specific debt: they cannot call more than seven times within seven consecutive days, nor can they call again within seven days of a conversation about that debt, preventing harassment and abusive practices, though these are rebuttable presumptions of compliance.
Getting a Client to Pay an Invoice after Nonpayment
The "15/3 rule" is a popular, though somewhat debated, credit card strategy suggesting you make two payments in your billing cycle: one about 15 days before the statement closes and another 3 days before, aiming to lower your reported balance and improve credit utilization by keeping your balance low when the issuer reports to credit bureaus. While paying more frequently can help reduce interest and utilization, experts emphasize the key is to monitor your statement closing date, not just the arbitrary 15 and 3-day marks, as credit utilization is reported then.
Key takeaways
Email subject: Invoice #123 is two weeks overdue
We have now reminded you several times of your payment for Invoice #123, at the amount of $____. This is just another reminder that your payment is now two weeks overdue. Please send us a response if you received these reminders, or if you lost your invoice.
Dear [Contact Name], I apologize that we have not yet been able to fill payment for invoice [Insert Invoice Number]. We are currently experiencing [cash flow issues, etc.] that are preventing us from being able to make payments in a timely manner.
If you're delivering services on time to your clients, it can be frustrating to be met with excuses for late payment, which typically fall into one of four categories: systems error, supply chain, company crisis or dispute.
Payment history is the most important factor when determining your credit score, so just one late or missed payment could greatly impact your credit. Legitimate payments that are 30 or more days late may stay on your credit report for seven years, but filing a dispute could remove illegitimate late payments.
In a goodwill letter, sometimes called a late payment removal letter, you ask the creditor that reported your late payments to remove the derogatory mark from your credit reports. Late payments on a credit card or loan can have a widespread effect beyond late fees and higher interest rates.
A late credit card payment can negatively affect your payment history and credit rating, especially if it becomes a pattern. You'll also start to accrue credit card interest which can make any existing financial struggle even more difficult.
Hardship agreement
With a hardship plan, your card issuer may agree to lower your interest rate, suspend late fees or reduce your minimum payment on a temporary basis. You might even be able to skip a few payments while you work to rebound from the financial setback.
A card issuer must report accurate information, so it generally won't remove a correctly reported late payment. If there's an error, the issuer should correct it and notify any bureaus it reports to. You can also ask for a one-time goodwill adjustment, but it isn't guaranteed.