Companies treat late payment as customer behavior. Much of it is a consequence of how and when you invoice.
- ›The four causes of late payment you control
- ›What to automate
- ›Follow-up that works without damaging relationships
- ›What to keep human
The four causes you control
Late invoicing. Invoicing at month end for work delivered on the 3rd adds 27 days before the clock even starts. Invoice on delivery.
Invoice errors. A wrong PO number or missing detail sends the invoice back to the start of their process, often silently. You find out three weeks later.
Wrong recipient. Sent to your contact rather than accounts payable. Common, and it costs a full cycle.
No follow-up until it is late. A short courtesy check before the due date catches problems while they are still cheap to fix.
What to automate
Invoice generation from delivered work. Where time tracking or project completion drives the invoice, generate it automatically and review before sending.
Recurring invoices. Retainers and subscriptions on a schedule, with a review step.
Pre-due check. A friendly confirmation a few days before the due date that the invoice was received and is in their system. This single automation resolves more late payments than any chasing sequence.
Escalating reminders after the due date, with the schedule and tone you define.
Overdue detection and prediction. Flagging what is late, and predicting what is likely to be late based on that customer's history, before it happens.
Follow-up that works
Tone matters more than frequency. Three principles:
Assume a process problem, not bad faith. Most late payments are administrative. "Just checking this reached the right person" gets better results than a demand.
Make paying easy. Include everything they need to process it: PO reference, payment details, and a contact who can answer a question.
Escalate through people, not volume. After two reminders, a call to your relationship contact beats a third email. Relationships resolve what automation cannot.
Important: Sending an invoice or a chaser is an outward-facing action. Draft automatically, review before sending. An erroneous chaser to a customer who paid last week is a relationship cost that outweighs the time saved.
What to keep human
- ›The decision to escalate to formal collection.
- ›Payment plan negotiation.
- ›Anything involving a disputed invoice, where the dispute is the real issue.
- ›The relationship call, which is what actually resolves persistent lateness.
Measuring it
- ›Days sales outstanding, trending.
- ›Percentage paid on time, which is more actionable than average days.
- ›Time from delivery to invoice, the metric most companies never look at and most often fix things.
FAQ
Should we charge late fees?
They are worth having in terms and rarely worth enforcing on customers you value. Their function is deterrent, not revenue.
What about upfront or milestone payment?
More effective than any chasing process. For new customers particularly, deposits and milestone billing remove the problem rather than managing it.
How do we predict late payers?
Their own history. A customer who paid at 52 days three times will pay at 52 days again, and a system that has the history can tell you before you plan around 30.
Brainis generates invoices from delivered work, predicts late payment from customer history, and drafts follow-ups for review. See Finance OS.
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