top of page
  • Curtis Mackenzie

They won't pay their invoice!

Updated: Nov 28, 2019

A major challenge with managing a small company is "cash flow" and, of course, this requires you getting paid on time, as well as getting paid "ALL" the time. While most clients will pay what's owed, some will try to avoid paying and hope the vendor will simply give up. Small businesses suffer loss of productivity, stress, and hardship having to worry about collecting fees they already earned in good faith.

"According to a recent study by a large U.S. Bank, 82 percent of small businesses fail due to poor cash flow management".

A big part of cash flow management is getting paid on time. So what do you do when a client (big or small) hasn't paid you by the invoice due date? Here are some of the major issues you need to consider:

1. Make sure you have clear payment terms on contracts and invoices including a clear agreement of the services provided, conditions for a refund (if any), consequences for delay of payment.

2. How to get paid for an overdue invoice without damaging the client relationship.

Be firm, be consistent, and gradually escalate the collections claim in professional yet "determined" steps. Remember its usually not your client counterpart's money" (its the companies) and the counterpart will very likely not want to deal with the upcoming conflict if they don't pay. You need to make it at least a little uncomfortable for them.

3. Follow a three notification rule, engaging client stakeholders at increased seniority level and level of urgency.

4. There are various tactics and strategies you can use before legal action is required. We'll cover these in our next post "How to collect on an unpaid invoice."

5. If necessary, engage a lawyer or collections agency. That does not mean you need to actually go to court and it does not need to be expensive. How do you keep costs at a minimum? ,...more on this in upcoming posts.

"The average small business in the US has USD 84,000 in unpaid invoices".

Want a business hack to all of this ? Hint: ... rarely will you need to take formal legal action to collect a payment since neither party will want to go to court. The trick is to make "not paying" a bigger hassle and cost to the client than the value of the amounts owed. For more advice, support and information on ways we can help, please contact us - Curtis Mackenzie - MD New Frame KK

81 views0 comments


bottom of page