Are Your Customers Missing Payments?

Though you need customers to build your business, you don’t have to tolerate those that are habitually late on payments. Here’s a look at how to handle customers who frequently miss payments, and how to determine the best course of action for your business.

  1. Hold their feet to the fire. While some customers are slow to pay for innocent reasons, others may not have a valid excuse. Regardless of the customer, every late payment has a story. You owe it to your business to pick up the phone and figure out what it is soon after the customer’s invoice becomes past due (according to stats reported by Bloomberg Businessweek via the Commercial Collection Agency Association, the longer an invoice goes unpaid, the less likely you are to collect on it). Once you understand the “why” behind missing payments, you may be able to determine a mutually beneficial solution with the customer based on his or her unique need, including improving or adapting your billing processes and expanding payment acceptance methods.
  1. Determine if the late payment is worth the headache. Put your personal feelings about late-paying customers aside and look at the big picture business implications. For example, you’ve likely invested time, energy and marketing dollars in establishing the customer relationship. Consider those financial implications, the profit margin you realize from the customer (once they do pay), along with intangible benefits like referrals, visibility to a broader customer base, and the nature of the work you perform for the customer. If you’ve had past conversations about timeliness of payments and the problem persists, assume it will be ongoing — and consider the cost such disrespect represents. Though you can hire a collections agency and/or take debtors to small claims court for amounts owed that are less than $5,000, both efforts will result in a loss of your valuable time — at the very least. Accounting for all those factors, determine if the relationship is worth the headache, or if your long-term needs are better served by ending the relationship and pursuing new, more financially reliable customers.
  1. Establish clear payment policies. As a business owner, you have the power to change the rules as you go — provided you inform customers of your new policy. Establish written payment policies including: when you will issue invoices (and by what method), the forms of payment you accept, when payment is due relative to the customers receiving the invoice, and the penalties that exist for late payments. Specify exactly what happens when a payment is past due in various increments. For example, you might assess an additional 2.5 percent charge for the amount due if the invoice is past due by 10 days, increasing that amount to five percent for past due by 20 days. Distribute the policy to all of your customers and post it on your website. Most importantly, enforce the policies you set.
  1. Make it tough to not pay on time. Leverage electronic invoicing tools that help you track the life cycle of a customer’s billing experience, from receiving your email containing the invoice to when they opened it. Choose an electronic invoicing system that allows the customer to pay immediately with a credit card when it’s top of mind. Additionally, equip your website with a secure payment gateway that allows customers to manage their account themselves and pay using a debit or credit card at their convenience. Include the direct web link to the payment page on all invoice-related communications. When you call late-paying customers with collection reminders, direct them to the site where they can make their payment. Establish an account with a reputable payment provider so you can process customer payments over the phone using their credit card.


Determining whether a customer relationship is still serving the needs of your small business isn’t personal; it’s smart business. Examine your payment policies for efficiencies, and work with your customers to arrange mutually beneficial solutions whenever possible — but don’t be afraid to move on when a customer doesn’t value your business enough to pay for it.

Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm, and has a vast amount of experience in the payment field. She has more than 15 years experience in the bankcard industry in direct sales, sales management and marketing.