Agency Handy

Client Not Paying Invoice

Client Not Paying Invoice? What You Can Do Next

Client Not Paying Invoice

You’ve done the work, sent the invoice, and waited patiently. But the payment hasn’t come. It’s frustrating, right? Unpaid invoices can mess up your cash flow and make you feel like all your hard work isn’t being valued.

But don’t worry, you’re not alone, and there are ways to handle this. 

Whether the delay is due to a simple oversight or something more serious, you can take steps to address the situation calmly and effectively. 

This guide will show you what to do when a client not paying invoice, how to handle tricky scenarios, and how to avoid these issues in the future. Let’s Start!

What to Do When a Client Doesn’t Pay

Unpaid invoices can be frustrating, but the way you handle the situation matters. Staying professional and following clear steps can help you recover payments without damaging your relationship with the client. 

Here’s how to approach the issue effectively:

What to Do When a Client Doesn’t Pay

Step 1: Send a Friendly Reminder

In many cases, late payments are simply an oversight. Clients might have missed your invoice, forgotten the due date, or faced administrative delays. Your first step should always be a polite reminder.

A simple email can go a long way. 

Reattach the invoice and include a brief message like, “I just wanted to check in regarding the invoice sent on [date], which was due on [due date]. Let me know if there’s anything I can assist with to help process it.” 

Keeping your tone friendly and professional encourages a positive response.

This step is effective because it shows you’re attentive without being pushy. Often, this is all it takes to resolve the issue.

According to a report by Chaser, businesses that regularly follow up on over 90% of their invoices are significantly more likely to receive payment within a week of the due date. Consistent reminders are key to avoiding unnecessary delays.

Step 2: Follow Up with an Updated Invoice

If the first reminder doesn’t work, send a follow-up with a revised invoice. This step signals that you’re keeping track of the payment while providing another chance for the client to act.

David Allen, known for his productivity principles, stresses the importance of clarity in communication. A revised invoice with updated details and a new due date ensures there’s no room for confusion or excuses.

Include a note in your follow-up like, “I’ve reissued the invoice with an updated due date for your convenience. 

Please let me know if there are any questions or if you need further details to complete the payment.” Taking this step shows you’re professional and organized, which helps reinforce trust.

Step 3: Contact the Client Directly

If reminders and follow-ups don’t lead to payment, it’s time to reach out directly. A phone call or a scheduled meeting can help you uncover the real reason for the delay.

This is where Simon Sinek’s advice on listening with empathy becomes valuable. Instead of approaching the conversation with frustration, aim to understand the client’s perspective.

A direct conversation allows you to ask thoughtful questions like, “Is there anything holding up the payment?” or “Can I clarify any details about the invoice?” 

These questions create an open dialogue and give the client a chance to explain their situation.

Once you’ve identified the issue, offer solutions. Whether it’s clarifying details, adjusting timelines, or addressing concerns, showing a willingness to collaborate often leads to a quicker resolution.

Step 4: Stop Ongoing Work (If Applicable)

If payment is still delayed and you’re actively working on a project for the client, you might need to pause further work. 

This step protects your time and resources while making it clear that timely payments are necessary.

Entrepreneur Barbara Corcoran emphasizes the importance of setting boundaries. She believes that clear communication about what you need and why builds respect in professional relationships.

When pausing work, inform the client in writing. Be professional but firm, explaining that the pause is temporary and tied to the unpaid invoice. 

For example, you could say, “To continue with the project, I’ll need to pause work until the payment for invoice [#] is processed. Please let me know once it’s cleared so we can move forward.” 

This approach keeps the situation focused on business rather than emotions.

Step 5: Offer a Payment Plan

If the client cites financial difficulties, offering a payment plan can be a practical way to resolve the issue. It allows the client to pay in smaller installments while ensuring you still receive what’s owed.

Suze Orman, a personal finance expert, advises creating fair but structured agreements. She suggests breaking the payment into manageable amounts with clear deadlines to avoid misunderstandings.

So, when setting up a payment plan, document everything in writing. 

For example, “We can divide the payment into three parts of [amount], with the first installment due on [date]. Please confirm if this works for you.” 

This flexibility not only helps recover the payment but also shows you’re willing to work with the client in difficult times, maintaining a positive relationship.

What to Do When a Client Refuses to Pay

While some clients may pay after gentle reminders and follow-ups, others may refuse due to disputes or financial challenges. Handling these tougher situations requires a structured and professional approach.

Here are the steps you can take to address these more challenging scenarios:

What to Do When a Client Refuses to Pay

Step 1: Address Disputed Invoices

Disputes over invoices are one of the most common reasons for nonpayment. If the client is refusing to pay because they disagree with the invoice, resolve the issue by:

  • Listening to Their Concerns: Ask the client to explain the issue. Avoid being defensive and try to understand their perspective.
  • Reviewing the Invoice: Double-check the invoice for any errors, such as incorrect amounts, missing details, or unapproved charges.
  • Providing Documentation: Share contracts, work orders, or communication records to clarify the agreement and justify the charges.
  • Offering Solutions: If the dispute is valid, correct the invoice or provide a partial discount if appropriate.

Tip: Maintain detailed records of your agreements and client communication to prevent disputes or resolve them quickly.

Step 2: Escalate the Situation

If addressing disputes or reminders doesn’t work, it’s time to escalate your efforts. Do so professionally and strategically:

  • Send a Final Notice: Draft a formal “Final Payment Notice” email or letter. Clearly outline the amount owed, the payment deadline, and potential consequences if payment is not received.
  • Contact a Decision-Maker: If the client is part of a larger organization, escalate the issue to a higher authority, such as the finance manager or CEO.
  • Hire a Collection Agency: Engaging a reputable collection agency can help recover overdue payments. They specialize in managing debt recovery while maintaining professionalism.

Tip: Keep detailed records of all communication and attempts to collect, as these can be useful in legal or arbitration processes if needed.

Step 3: Consider Legal Options

If all attempts fail, pursuing legal action may be necessary. This step should only be taken when other methods have been exhausted and the amount owed justifies the effort and cost.

  • Send a Demand Letter: A demand letter from a lawyer can often prompt payment without further legal action. The letter should detail the owed amount, deadlines, and legal consequences for continued nonpayment.
  • File a Small Claims Case: For smaller debts, small claims court is an effective and affordable option. Be prepared to present evidence, such as contracts, invoices, and communication records.
  • Mediation or Arbitration: These alternatives to litigation allow both parties to resolve the issue in a structured but less formal setting.
  • File a Lawsuit: For large debts, a lawsuit may be necessary. Consult with an attorney to evaluate your case and understand your legal options.

Tip: Legal action should always be a last resort. Before proceeding, ensure the potential recovery outweighs the costs and effort.

How to Avoid Payment Problems from the Start

To make sure clients pay on time, it’s important to take the right steps from the beginning. These simple practices can help you avoid issues and keep everything running smoothly.

How to Avoid Payment Problems from the Start

Write Clear Agreements

Always create a clear agreement or contract before starting any work. Make sure it explains exactly what you will do, how much it will cost when payments are due, and what happens if payments are late. This avoids confusion and protects you if there’s a problem later.

Talk About Payment Upfront

Be clear about how and when you want to be paid before the project begins. Tell your client when you will send invoices, how long they have to pay, and what happens if they miss the deadline. Talking about payments early avoids awkward conversations later.

Build Trust with Clients

Clients are more likely to pay on time if they trust you. Be honest, deliver what you promise, and stay professional. When clients feel confident in your work, they are more likely to follow through with payments and stay loyal.

Check New Clients Before Starting

If you’re working with someone new, take the time to check their payment history. Look at reviews, ask for references, or run a basic credit check. This can help you decide if they are reliable, especially if it’s a big project.

Final Thoughts

Managing late or unpaid invoices can be frustrating, but having a clear plan can make all the difference. If you’re dealing with a client not paying invoice, addressing the issue promptly is crucial to protect your cash flow and maintain professionalism.

By setting clear expectations, communicating openly, and taking timely action, you can handle these challenges with confidence while protecting your business and maintaining client trust.

If managing payments feels overwhelming, Agency Handy is here to help. With features like automated invoice generation, customizable templates, and seamless reminders, it’s designed to keep you organized, reduce errors, and ensure timely payments without hassle.

Reach out to Agency Handy today and discover how it can help you stay focused on growing your business.

FAQs

What should I do if a client keeps delaying payments but doesn’t refuse outright?

Set stricter payment terms, like requiring partial upfront payments or adding late fees for future work. Communicate with the client to understand the reason for delays and consider offering a payment plan if necessary. Clear boundaries encourage timely payments.

How do I politely ask for payment without damaging the relationship?

Send a friendly reminder with a professional tone, assuming the delay is unintentional. Use phrases like, “Just checking to confirm if you received the invoice.” Politeness keeps the relationship intact while encouraging action.

Are there ways to protect myself legally from nonpayment in future projects?

Yes, create a detailed, signed contract outlining payment terms, deadlines, and late fees. Include a dispute resolution clause to handle disagreements professionally. A strong contract offers legal protection and clarity.

Picture of Tasnia Tarannum

Tasnia Tarannum

Tasnia is a part-time writer at Agency Handy, bringing three years of experience in creating SEO and reader friendly content, including SaaS. A passionate storyteller, she loves diving into new narratives. When she's not writing, you'll find her immersed in a good book or enjoying time with friends.
Share the Post: