It can be frustrating when a client doesn’t pay you your invoice. However, cash flow is a critical component in the success of a business, which is why checking on invoices is vital for freelancers and small business owners. 

Sometimes clients request extensions on payment deadlines, which is understandable since life happens! However, some clients will not pay their invoices on time for various reasons, and the last thing you want to do is to chase after payment for months with no results. 

So what can you do when this happens?

1. Send a reminder email

If, unfortunately, the payment didn’t come through, send a reminder via email, sending something along the lines of “this is a polite reminder for you to make payment on your outstanding invoice by (date).” If you don’t get a response from the client within one week of the reminder, you can send them a second and final reminder informing them that “the final date for payment is (final date)” and then leave it at that.

In both cases, make sure to include a copy of your invoice so that the client has all the information they need to make the payment. 

You can also try to add a payment method in the reminder email if you realise that this was one of the reasons for the late payment.

2. Try to understand the problem via personal contact

Time to pick up the phone and ask the client directly why they haven’t paid yet. This action will help you to understand what caused this delay in payment and, most of all, how to fix it. Client communication and management are a must in these situations. 

We leave here two of the most common scenarios that even our founders had to go through:

The client doesn’t have the funds to cover your invoice

This situation happens more often than we’d like to admit: when a client’s cash flow is inconsistent, maybe they cannot make a payment on time. Unfortunately, when this happens, they will probably leave you in the dark until after the fact when you ask them. 

If this is the case, you can suggest a different payment option that may be more feasible for them. You will need to compromise and undoubtedly make this payment recovery more lengthy for you, but it may be something you may be willing to do to maintain the relationship and get your invoice paid. 

The client is not satisfied with your services or is disputing the invoice.

Sometimes, a client may not be happy with the work you have done for them, and they may seek an alternative solution while deciding on their own to hold off on payments. These are maybe the most complex cases where a balancing act between you and the client is needed to reach a conclusion that works for everyone. Here you will need to identify why your client is unhappy and find solutions to remedy these concerns regarding quality and/or the invoice amount.

3. Refer back to the contract

There could be several reasons your clients are not clear on payment terms, which is where having an agreement in place can save the day.

You will need to reiterate the terms of your agreement and do your best to ensure there are no misunderstandings. It might be helpful to send another copy of your invoice and the signed contract so they have this on hand while you explain it. 

We suggest doing this both in writing and by calling/meeting your client. Be very clear about the terms of the agreement and remind them of the further developments you are trying to avoid them. Consequences could potentially include late fees and legal action.

4. Add late payment fees

To be able to add these late fees, you first need to make sure you have a clause in your contract that covers them. If this is the case, when all previous attempts fail, you can refer back to your agreement and consider adding a fee if the invoice remains unpaid. You can do this by writing an official “reminder” email that informs the client of the non-payment issue and provides a deadline for the full payment to be made. 

If you cannot charge a late fee on your contract for some reason, it can be that you have a close relationship with the client, or you already know they are facing hardship and don’t want to add to the fire. If this is the case, you can remind them that you will be able to hold off on these additional fees as long as you can see their cooperation in resolving this issue.

5. Take legal precautions

If your client is not responding to any of the previous methods mentioned above, you may need to consider taking more severe measures to resolve the issue. Involving your business in legal action is stressful and can add up on top of your already full plate, but in some cases, it is inevitable. 

Before taking the step to go the legal route, you may want to check in with your lawyer to see your options and the best course of action. But, again, we suggest that this step should only be taken as a last resort when all other options have been exhausted and if the amount to recover is enough to make this battle worth it.

Preventing late payments is less painful than chasing them.

Late payments can be frustrating for you and your clients. So let’s now see what you can do to prevent this stressful situation from emerging.

Have a clear payment schedule outlined 

Be clear about the payment deadline in the contract from the beginning and communicate it to your client before the work begins. Make sure they agree on the payment schedule and understand the key moments. 

In an ideal scenario, you can get the total amount upfront before works begin. You will commonly receive at least a deposit before starting the job and then the rest at a later stage. We suggest having this last payment done after final confirmation but before the final deliverables are sent to the client. This precaution would help dodge the usual chase that happens after an urgent delivery takes place. 

In Yocory, we can give you peace of mind as you and your client can agree on a payment schedule that will work for you. Then, at the moment specified in the plan, the platform will charge the payment method provided by the client when they have agreed to the schedule. 

We aim to see a world where there are no more payments to be chased, late fees to be charged or missed deadlines that result in loss. A win-win for all involved!

Send payment reminders before the payment is due

If you send the initial invoice to the clients explaining clearly the terms and conditions you want them to follow, this first step should be quite easy to follow.

You can first try to avoid the invoice being overdue by sending a polite reminder before the due date (it can be anywhere from 15 to 3 days before payment is due, it usually depends on the type of client you are dealing with). 

These reminders are usually sent by email or SMS.

Yocory notification system allows you to manage these reminders and make them on brand while sending automatic reminders when the time is right.

Clearly state in your contract what happens in case of non-payment 

It’s essential to clarify the consequences if your client fails to pay on time. 

Generally, you should always include a few possible scenarios when writing the contract. It will help you to avoid any misunderstandings that could lead to future disputes between you and your client, especially if the courts get involved.

Lastly, ensure that your signature is legally binding through signee verification. Not all electronic signatures are equal. That’s why in Yocory, the verification is done via secure channels allowing both the buyer and seller to confirm the counterparty’s identity.

Make it easy for clients to pay you

Nowadays, providing clients with a secure payment system can significantly impact their first impression. Stripe is a great way to get paid, mainly because you make sure you have a payment method on file for your clients when the due dates come. 

Additionally, your clients gain peace of mind. With just a couple of clicks, they can focus on the project rather than the admin that goes with it.

At Yocory, we try to make the payment process as quick as possible for our clients and their clients through our integration with Stripe.

Time to invoice your next client

These steps should help ensure that payment deadlines are met and that all invoices are paid on time. Sign up for a free trial to check out our invoice feature, where you can create and add invoices to your projects.

If you have further questions or need any help managing your invoices, don’t hesitate to get in touch with us!