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Got a Client Who Won’t Pay Overdue Invoices? Here’s What to Do

Mariah Bliss
Man sits on a bench outdoors with a cup of coffee wondering how to get a client to pay an invoice

I remember the first time one of my customers refused to pay for a project I had completed for him.

In fact, thinking back, it wasn’t even an outright refusal. He just - disappeared. Didn’t return emails. Didn’t respond to my phone calls. And because I had already delivered work to him, he was able to use all of my content, which was particularly infuriating to see.

So believe me when I say I’ve dealt with customers who just don’t pay their invoices. And I definitely understand that first gut reaction, which is to get outraged at someone who would take advantage of your time and talent. If you’re like most small business owners, you’re not exactly swimming in a pool filled with gold coins - so unpaid invoices can really impact you and your family.

But if you want to pursue that late-paying customer and actually get the money that’s owed to you, first, take a deep breath. However justified, anger can sometimes lead to the kind of mistakes that make it even tougher to get paid. Next, use this step-by-step guide that can help you collect on unpaid invoices without losing your mind.

A Step-By-Step Guide to Collecting on Overdue Invoices

Ready to get the payment you deserve? Take a look at these 5 steps for getting customers to pay you:

  1. Make absolutely sure the invoice is overdue.

    I’ll make this one short-and-sweet, because I know in my experience, I’ve never forgotten an overdue invoice. But it’s worth going through your accounts to make sure that the bill hasn’t been paid. This step is especially important if your clients pay you by direct deposit, Paypal, or Venmo, as these payments can sneak through to your bank account without you even being aware of them.

    You should also confirm that the customer passed the amount

    Double-check the invoice by going through your records and business bank accounts to verify that the bill is 100% still unpaid. If you end up finding out that you did get the money, awesome! But if you confirm that your customer hasn’t paid, move on to the next step.

  2. Try out the “speak softly” approach.

    Sometimes customers have a hard time paying invoices because they just don’t have the money, but they’re too ashamed to admit it. I ran into this situation before with a customer who was three weeks paying me on an invoice and wasn’t responding to the reminder emails I had sent out.

    Instead of letting her know how angry I was - which was very tempting, believe me! - I decided to take the “speak softly” approach. In my email, I let her know that if she was having any problems paying my invoice, that she should reach out to me and I would work on an installment plan with her. What’s more, I didn’t make her feel bad or guilty for missing the invoice due date.

    A lot of stuff can happen to your customers. Maybe they get sick, or they suddenly find themselves dealing with a personal problem that derailed their ability to promptly pay you. As a small business owner, you can make a lot more headway in these situations if you show a little empathy and make accommodations for your clients when possible.

    After all, it isn’t just great customer service; it’s human kindness.

  3. Send a final letter or email about the debt.

    At this point, you’ve probably already called, emailed, and/or mailed reminders to your customer about the invoice. That leaves you with one conclusion: your customer is either ignoring you or traveled to a magical land where phones and the internet don’t exist. That’s why the very first thing you need to do is communicate about the overdue invoice in writing, whether by letter or email (or both).

    It’s important to get this final piece of communication in writing because then you have something to point back to in case you need to take your customer to small claims court. Speaking in person or over the phone with customers may feel more efficient, but it gets a lot tougher to prove your case if there’s no evidence of what was said during that convo. Don’t be aggressive or emotional in your final communication; instead, be as straightforward and neutral as possible.

    #### Here’s an example of what I used to send when I had a hard time getting a client to pay me:

    * * * * *

    “Date: XXX

    Dear CUSTOMER NAME:

    I’m writing/emailing to inform you that you have not yet paid your invoice for PROJECT NAME, which was due on PAYMENT DUE DATE. I have made numerous attempts to contact you in order to help you address this invoice, with my last contact taking place on DATE.

    If you do not pay this late invoice (attached) by DATE, I will be advancing this matter to my attorney so as to collect on this debt.

    Thank you for your prompt attention to this matter.

    BUSINESS OWNER’S NAME”

    * * * * *

    You can use something similar to send to your own clients, but whatever you do end up sending, make sure it spells out clear expectations for the next steps that will occur if a client doesn’t pay. You’d be surprised at how quickly clients respond to a notice that contain the words “attorney” or “debt collections”.

  4. Get outside help.

    If your customer still hasn’t responded to your demands or just straight-up told you that he or she refuses to pay, it’s time to call in some outside help. Small business owners generally tend to hire debt collection agencies or attorneys, but the best option for you will ultimately depend on the size of the debt you want to collect. Keep in mind that anyone you hire to help you collect the debt will require a significant percentage of it as payment, so be sure you know exactly how much of the final debt you’ll end up with before you sign any contracts.

    On a personal note, I’ve used a debt collection agency in the past with very good results. However, I only ended up with about 50% of the final invoice amount, but I was absolutely mentally prepared for this outcome.

  5. Accept a smaller payment.

    I know this feels like admitting defeat, especially if you’ve gone through all the steps outlined above. But if you don’t want to go through the process of hiring an attorney or can’t find a debt collections service that specializes in smaller amount of debt, your last-ditch resort might be to tell the client that you’ll accept a smaller payment.

    I had to do this once, and I hated it. It felt completely unjust to have a non-paying customer get away with only giving me a fraction of what we had previously agreed on. But because the project fee was so small, I couldn’t get outside help - and that meant I had to accept some payment rather than no payment.

    You might be tempted to refuse to back down based on principle, but it’s worth asking yourself if you’d be okay getting paid something rather than nothing. Offering a smaller payment option isn’t a guarantee your customer will eventually pay up, but it couldn’t hurt to try if you’re open to it.

  6. Blacklist the customer.

    So this really doesn’t help you collect on an unpaid invoice, but you definitely want to take steps to ensure you don’t work with that customer again. Whether you create a vision board of bad customers or have a small notebook with the names of difficult customers you’d like to avoid, protect yourself from ever getting into this situation again.

    Do your fellow entrepreneur a favor by letting them know you didn’t get paid by a certain client. For example, if you’re a general contractor and a customer refused to pay the final portion of your project fee, feel free to let other professionals in your network know. It’s a courtesy that will help protect them from falling victim to the same customer.

    One word of warning: Don’t end up slandering the customer when telling other entrepreneurs about what happened to you. Keep your story to the facts - “This customer didn’t pay me, so I’d be careful about working with him/her” - and you should be fine. Keep in mind that if a customer tries to sue you for slander, your general liability coverage may be able to pay for your legal fees (how cool is that?).

How to Prevent Unpaid Invoices From Ever Happening Again

Collecting on unpaid invoices is mentally and emotionally exhausting, so it’s worth it for business owners to put lots of safeguards in place to prevent it from ever happening. Based on my own experiences, here are my recommendations for avoiding unpaid invoices in the future:

Ask for a deposit before starting work.

A customer who will pay upfront will more than likely pay once the project is finished. A reasonable project deposit (say, 25% or 50%) lets the customer demonstrate that he or she is serious about paying you. Plus, if the customer ever disappears or refuses to pay the final invoice, you at least got something for your hard work.

Offer various payment options and plans.

If you specialize in projects that require larger payments - like a tree removal specialist or a lawyer - you may find it easier to collect on unpaid invoices if you offer installation plans. For example, if you’re working on at $1500 project and a client seems nervous about the price, allow for payment installations, as it might be easier for a customer to pay in chunks rather than all at once.

You should also think about expanding your payment abilities, especially if you only take cash or personal checks. A lot of customers may not have traditional checkbooks anymore, but a lot of these same people are very familiar with payment services like Venmo or Apple Pay. Get creative with how you take payments, and you could reduce the number of unpaid invoices you deal with.

Recognize the warning signs of a non-paying client.

Dealing with a non-paying customer is tough, but it does come with a silver lining: You start to get a sixth sense for people who will likely flake once the final bill comes. Eventually, you’ll get to the point where you’ll have a better sense for a trustworthy client, and someone who will probably be more trouble than they’re worth.

While these red flags might vary from industry to industry, I learned that if any so-called customers demonstrated the following signs, I needed to run the other way:

  • Gets really nervous or uncertain when discussing project fees.
  • Starts making excuses around paying any upfront deposits.
  • Is difficult to get ahold of, whether by email or phone.
  • Insists on a different type of payment to what you accept.
  • Post-dates personal checks.

Collecting invoices from non-paying customers is a frustrating and time-consuming process, which is why it’s worth putting safeguards in place to make sure it doesn’t happen to you. But even if it does, don’t blame yourself - it happens to the best of us. Just use the above tips, and you’ll increase the odds of making sure you get paid for all of your hard work!

About the author

Mariah Bliss
Mariah Bliss
I love writing about the small business experience because I happen to be a small business owner - I've had a freelance copywriting business for over 10 years. In addition to that, I also head up the content strategy here at Simply Business. Reach out if you have a great idea for an article or just want to say hi!

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