There are occasions when despite your best effort, a customer payment is late or, worse yet, never arrives (even after repeated follow-ups). Here are four follow-ups to help remedy a missing payment and help prevent them in the future.

1. Send a series of escalating communications:

If you have already sent an invoice and followed up with a phone call, but there is still no payment, you should mail a letter and track delivery via certified or priority mail. The first overdue letter should be helpful, the second concerned, and the third politely punitive. Restate the means for payment; include a duplicate final invoice, and the next steps if unpaid.

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2. Keep a collection agency in your back pocket:

While it’s not ideal, customers tend to respond quicker if third-party collection agencies are involved because it can affect their credit. Calling in a collection agency costs you money (often a percent of the debt recovered from the client), and can potentially harm or even end the relationship with your customer. However, sometimes it can be the only logical next step. Make sure to note in your receivables policy when a third-party collection agency might get involved.

3. Know when to let it go:

If you’ve hired a debt collection firm and still haven’t received payment, you need to understand if it’s costing you more to continue pursuing this debt than the actual amount you’re owed. There are legal actions you can pursue, but they are often costly, and still can’t guarantee repayment. At this point, it might be best to learn what you can from the experience and then walk away. As frustrating as it can be, sometimes it’s best to just let it go.

4. Revamp your process so it doesn’t happen again.

If a customer says that you weren’t clear in your payment terms or they didn’t know what or when a bill was due, you might need to take a look at your payment policy or procedure.

  • Make sure the payment terms are clearly noted on the invoice as well as methods of payment acceptance.
  • Email friendly payment reminders with the invoice linked to or attached before the final due date (ex: three emails — 7, 14, and 30 days out from the due date).
  • Have the customer sign a contract or service agreement with the payment terms, date of deliverables, and process for any add-on or overdue payment charges stated. It may seem like overkill, but getting it “in writing” can go a long way.

Get other ideas about how to manage non-payers and your business processes in Your Ticket to On-Time Payments: The 5-step, must-have action plan to cut payment delays, or check out the PaySimple system to simplify how you bill and collect.