Recently, I have been writing about increasing sales, reinforcing branding, reducing costs, and other ways to survive a rough economic year. Another very important strategy to keep the cash flowing is debt collection, and how to make debtors pay.
Debt collection can literally make or break your business. Failing to follow up with debtors regularly could make you end up with zero in the bank. It’s a fact that the older a debt becomes, the harder it is to collect.
It’s vital that you create a process for dealing with debtors and stick with it. The more often you enforce this, the quicker clients learn to stay within your terms of trade.
Here are seven tips to avoid the debtor drama, and make debtors pay on your terms:
- Accept plenty of payment methods
- Always ask for a deposit up-front
- Spell out payment terms clearly and regularly
- Follow up overdue invoices immediately
- Increase the debtor pressure
- Offer Repayment Schedules
- Engage a good debt collector
OK, now let’s get into each of these in more detail.
Accept plenty of payment methods
Way back in the early 2000’s when I started in business, just about all of my clients paid by cheque. Now, cheques would account for just 5% of our receivables. The majority of our clients pay by direct bank transfer, which is better for us: the money is available quicker, and there’s less risk of a bounced cheque.
We also have some clients who pay by credit card. Sure, we take a small hit on the fees, yet we find many clients are keen to pay by credit cards to solve their own short-term cashflow issues. Speak to your bank or find a payment gateway for safe credit card transactions.
The more payment methods you offer debtors, the less excuses they have to neglect paying.
Always ask for a deposit up-front
I’ve always asked for a minimum 40% of the project total as a deposit before starting work on a project, and rarely does a client complain.
Asking for a deposit up-front means that you’re establishing the client is serious and can pay their bills. If they’re unable to pay the deposit, how will they pay for the rest of the project?
Spell out payment terms clearly and regularly
Be sure to include your payment terms within your proposals, and that the due date is clearly marked on all invoices. You can really help set the expectations form both parties, by including this detail in your sales proposal clearly and in plain sight.
I know a person who even sends meeting requests as calendar reminders to their clients when they send the invoices. Be very clear with due dates — make the date as large and as bold as the total on your invoice.
Follow up overdue invoices immediately
The day after your invoice was due is the best time to send a polite, yet firm, email enquiring when they expect to pay, and if there’s any issue. Include a copy of the invoice as an attachment, and let them know you’ll call in a few days time if you don’t hear from them.
Set the tone carefully though; you want to sound helpful and genuinely concerned they may have misplaced the invoice, rather than threatening or angry.
A week later, if the payment is still yet to be received, call and ask them when they expect to pay. Your job is to make debtors pay, and using this method, you’re forcing the client to declare a date, which they’ll be less likely to break. Follow up with an email, confirming the date you expect to receive the payment.
Increase the debtor pressure
As time passes and an unpaid invoice remains outstanding, it’s important to steadily increase your efforts to close the loop when making debtors pay. Debts rarely resolve themselves, and without clear, consistent follow-ups, there’s a risk the issue may be deprioritised (or even forgotten) by your client.
Begin by adjusting the cadence of your communication. While early nudges can be polite and spaced out, older debts call for more frequent reminders. Each follow-up should grow firmer in tone, emphasising the urgency of resolution. That said, maintain a professional and composed demeanour at all times. It’s crucial to stay calm, courteous, and focused on the issue, never let frustration slip into personal language or blame.
If you’re in a position of leverage; say, you host the client’s website, or you still hold a key deliverable, don’t shy away from using that responsibly. Gently but clearly communicate that you may need to pause services or withhold final assets if payment continues to be delayed.
Turning off a site or withholding code should be a last resort, but it can serve as a powerful motivator when previous reminders have failed.
Transparency is key here. Always give advance notice of any such action, explain the steps you’re taking, and give the client an opportunity to respond. The goal isn’t to punish, it’s to prompt action and bring closure to the issue, while also protecting your business boundaries.
Remember, persistence pays—but so does professionalism.
Offer Repayment Schedules
If a client is struggling financially and unable to pay your invoice in full, it may be worth reaching out with a level head and a collaborative mindset. Rather than letting the situation stagnate, pick up the phone or arrange a quick video call and open the door to a constructive conversation.
Often, clients who are genuinely in a tight spot will appreciate the opportunity to talk things through, especially if it means avoiding late fees or collections.
One practical approach is to propose a repayment schedule: breaking the total amount into smaller, more manageable installments over a defined time period.
While it might not be the ideal outcome (naturally, we’d all prefer prompt, full payments), recovering your fee gradually is far preferable to chasing down a debt indefinitely.
Once you’ve agreed on the plan, document it thoroughly. Spell out the installment amounts, due dates, accepted payment methods, and any consequences for missed payments.
Sending this in writing, ideally via email or signed agreement, helps set clear expectations for both parties. And don’t forget to follow up after each due date. A quick check-in to confirm that payments are on track can prevent awkward surprises down the road and reinforces your professionalism.
Being flexible doesn’t mean being a pushover—it shows you’re willing to work with clients in good faith while still protecting your bottom line.
Engage a good debt collector
If the worst happens, and two months later you’re still without payment, you may want to hand the matter to a debt collection agency. These agencies often take a small percentage of the overall debt if they can collect it, so at least you’ll receive the majority of the debt.
Good luck, and here’s hoping you make debtors pay without resorting to any of these debt chasing tactics!
Conclusion
To help you with making debtors pay, here are those seven tips again;
- Accept plenty of payment methods
- Always ask for a deposit up-front
- Spell out payment terms clearly and regularly
- Follow up overdue invoices immediately
- Increase the debtor pressure
- Offer Repayment Schedules
- Engage a good debt collector
Best of luck dealing with that errant debtor!
There is research that shows once a customer reaches 3 payments behind they are nearly certain to default the rest of a debt. When it comes to period payments you’ll notice finance companies phone the moment the second missed payment occurs because at that point they have a huge chance of receiving the two missed payments PLUS continued payments thereafter.
Kind of an interesting tidbit of human nature I guess.