Late payments are the #1 cash flow killer for freelancers and small businesses.
The average small business is owed $84,000 in unpaid invoices at any given time. And 29% of invoices are paid late.
But some businesses get paid on time (or early) consistently. Here's how they do it.
Why Clients Pay Late
Before fixing the problem, understand the causes:
Most late payments aren't malicious—they're systemic. Fix the system.
Strategy 1: Get Payment Upfront (Or Partially Upfront)
The most reliable way to get paid on time is to get paid before you start.
How to introduce it:
"I require a 50% deposit to reserve your spot on my calendar. The remaining 50% is due upon completion."
Frame it as standard practice, not negotiable.
Who Can Require Upfront Payment?
Anyone. But it's especially important for:
- New client relationships
- Clients without established credit
- Projects over 2 weeks
- International clients
The risk of not getting paid always exceeds the risk of asking for a deposit.
Strategy 2: Make Payment Stupidly Easy
Every friction point costs you money.
Bad:
"Please wire payment to account #..."
Good:
"Click here to pay by card" [button]
Clients who can pay in one click pay immediately. Clients who need to find their checkbook pay "eventually."
Strategy 3: Invoice Immediately
The longer you wait to invoice, the longer you wait to get paid.
Set calendar reminders. Automate if possible.
The Psychology of Quick Invoicing
Strategy 4: Shorten Payment Terms
"Net 30" is a relic from when checks traveled by mail.
Shorter terms = faster payment. Most clients pay on the due date regardless of when it is.
Strategy 5: Build Payment Into Your Proposal
The best time to discuss payment is before you start work.
When payment terms are agreed upfront, there's no negotiation when the invoice arrives.
Example Payment Section
Investment: $5,000
Payment Schedule:
- $2,500 deposit to begin (due upon signing)
- $2,500 upon completion (due within 7 days)
Payment accepted via credit card or ACH transfer.
Late payments subject to 1.5% monthly fee.
Strategy 6: Automate Payment Reminders
Don't manually chase every invoice. Set up automatic reminders.
Most accounting and proposal tools can automate this. If yours can't, switch tools.
Strategy 7: Charge Late Fees (And Enforce Them)
Late fees work—if clients know you'll actually charge them.
How to implement:
- Include late fee policy in your contract/proposal
- Warn them at Day +7
- Add fee at Day +14
- Actually charge it
The goal isn't to collect late fees—it's to motivate on-time payment.
Strategy 8: Stop Work on Past-Due Accounts
No pay, no work. It's that simple.
Script:
"Hi [Name], I noticed invoice #123 is 14 days past due. I'll need to pause work on the project until this is resolved. Happy to resume as soon as payment is received."
This:
- ✓ Creates urgency
- ✓ Establishes boundaries
- ✓ Protects you from extending more credit
- ✓ Is completely reasonable (they agreed to payment terms)
Strategy 9: Offer Early Payment Discounts
Flip the psychology: reward good behavior instead of punishing bad behavior.
Some clients will take advantage of this. The ones who don't will still pay on normal terms.
Strategy 10: Qualify Clients Before Working Together
Some clients are chronic late payers. Screen them out.
Trust your gut. The headache isn't worth it.
Strategy 11: Build Relationships With The Right People
The person who hires you isn't always the person who pays you.
Get friendly with accounting. A 2-minute call when you onboard a new client can prevent weeks of chasing later.
Strategy 12: Use Proposal + Payment Software
The ultimate solution: collect payment at the moment they say yes.
No separate invoice. No waiting. No chasing.
Tools like OpenProposal combine proposals, e-signatures, and Stripe payments in one workflow. The client never leaves the document.
What To Do When Clients Won't Pay
"Hi [Name], just a friendly reminder that invoice #123 is due. Let me know if you have any questions!"
"Hi [Name], invoice #123 is now [X] days overdue. Please process payment at your earliest convenience. Per our agreement, I'll need to pause ongoing work until this is resolved."
"Hi [Name], this is a final notice regarding invoice #123, now [X] days past due. If payment isn't received by [date], I'll need to pursue collection options and add the agreed late fees."
Options:
- • Collection agency (they take 25-50%)
- • Small claims court (under $10K usually)
- • Payment plan negotiation
- • Write off and move on
For amounts under $500, it's often not worth pursuing. Fire the client and move on.
The Best Payment System
Collect payment at proposal acceptance.
Here's why:
- ✓ No chasing invoices
- ✓ No cash flow gaps
- ✓ Clients expect it (like paying for any other service)
- ✓ Signals professionalism