net 30 terms, invoice exactly on time NEVER late, “please find attached invoice N, also kindly following up on invoice N-1 which is now past due”, each invoice lists invoice history and payment status (red if overdue), solvent companies will respond, insolvent companies will ignore, send a polite second reminder at 1 week, all solvent companies will respond and remedy here, if no reply send notice of breach at 2 weeks, even insolvent companies will reply to this, they will lie and tell you payment is en route but it will get stuck over some technicality, follow breach process exactly, disengage services after cure period expires and hand it to collections. If your customer is not communicating with you about invoices THEY ARE NOT SOLVENT. If payments are slowing down and tardiness is increasing, they are not being forgetful, THEY ARE RUNNING OUT OF MONEY. They are fundraising behind the scenes and they are hoping for the best while transferring risk to you, or their customer is delinquent and they are aligning payments to transfer that risk to you. Most customers see themselves as good and honest, they are mostly not supervillains trying to screw their counterparties at every opportunity, but they are also taking on hidden business risks and they are underwriting that risk with assumptions like “this payment aligns with this source of cash and everything is balanced and proper”. The moment their assumptions are violated, the moment a risk appears that they don’t consider part of their risk model, or a hope/expectation did not pan out, they will experience anxiety and fear, they will tighten their control over their cashflow to try to establish agency and fortify themselves against the threat.

The relationship is NOT more important because THEY ARE NOT SOLVENT. Do not allow subcontractors to send their own invoices, you must do this yourself to ensure that all communication is exactly on time and never late. Lateness and inconsistency on your side erodes your ability to run a tight collections process, because if you are lackadaisical about payments then they can be too. When you lose control of collections it is not because of text vs email or language, it is because you don’t respect your own process and therefore they don’t respect it either. And when the water gets choppy, they will not think twice (they will not even think at all) about pushing on boundaries because you did not clearly establish them. They are facing a threat, their amygdala is in control, they may not even consciously realize they are doing it. But your process will make that boundary a bright red line, it will force them to make screwing you a conscious decision. And you will know exactly where you stand at all times.

I often hear about this attitude of putting the customer first. Having excellent customer service. The one thing people forget though, customers pay. When you're not getting paid according to the terms, they're not a customer anymore, they're a thief.

If your customer is legitimately having a money issues or something else, and they are actually a customer, they will contact you and attempt to work something out. If they just ignore you, they are not a customer and should be treated as such.

Incentive it!

Firms paying on time get discounts and other perks...make it a top headline or blurb in all your marketing...

Companies pay the utilities because they'll cut off service at some point.

You gotta be a utility and have a service you can cut off.

You communicate clearly, politely to your primary customer contact. You explain that the commercial arrangement is you provide service, their side of the deal is the pay on time every time and you never need to chase them.

You explain kindly that this is the only work arrangement that works for you, and that your company policy is to stop providing service if there’s an outstanding bill.

You explain kindly and patiently that it’s not practical for you to work with companies that can’t pay the bills and you’ll end the relationship if there’s three times it happens.

Then you stick to your word absolutely. If you waver, fold, let them break the terms, then none of this was worth anything.

Be willing to drop customers who don’t pay on time.

You’ll find mostly they train up pretty good. The rest ? Don’t stay in an abusive relationship.

My experience is that most of these are slipups, completely unintended, and that a kind reminder is actually appreciated.

Cutomers are mid-sized companies (60-600 employees, give or take) all based in Europe FWIW.

I'm not and have never been in your situation but consider this a summary of all anecdotes I've heard mixed with negotiation techniques.

The thing I would personally do is make sure the client has paid their invoice before providing the service. Essentially, this means paying for all previous missed invoices along with the next one. If you make people pay before giving the service, I think you avoid the case altogether.

Now, if you want to be harder: just ban them. Take them to Collections (or whatever the name is in the USA) and then never provide services to them ever again. This sounds really harsh and unfair but by not paying they also know how far they can go without giving you a dime. "Give them a hand and they take the arm."

I find it useful to have goons on payroll that make these kinds of problems go away

Gosh, I would always get behind on my dental invoices, because they would have some issue with my insurance, and I would try to figure out why the insurance company thought my policy didn’t exist or something, but the insurance company itself was Byzantine and I could never figure out who to talk to (and this is probably why the issue occurred in the first place)…

The office would just send a reminder invoice every so often, and if it got really behind, they would have their front desk person call me.

This was annoying for both parties but did not seem particularly harmful. Both of us were solvent. The amounts were not large. They had a routine process for unpaid invoices. And I would be embarrassed to show up in 6 months without having paid for the last visit.

If you’re hurting for funds, I would suggest letting them know directly that you need your invoices to be paid on time. Sometimes bills get paid late out of a sense that it’s okay to pay them late, but you might get more prompt payment from the well-meaning if you express that you need something different. I personally would have prioritized re-calling and re-calling the dental insurance company more (read: unpaid labor on my part, requiring me to demonstrate greater effectiveness than the office’s own claims staff) if someone were actually needing the payment sooner.

My three rules:

- A delay of more than one month without justification = immediate suspension of service.

- If the service was suspended due to non-payment, next collaboration only continues with full prepayment for the next month.

- Transfer of intellectual property and copyrights only after final payment.

My friend recommended to put a small percent late payment fee, stated in the contract and on each invoice.

Haven't really used it yet because we don't have a problem with late payments, but I do think it would work, because our B2B customers are usually very appreciative of saving small percentages when we offer it, and unlikely to just give up that money by being late.

Is it a Saas? Either way, Call them. Yes call. Ask for accounts payable. Ask what the problem is, missing invoice, missing approval etc. Ask them how to fix this. Ask them for a payment date. This is what credit controllers do all day. Don't threaten, just ask.

If they are evasive, then state when you will be withdrawing the service.

Next month before it is due, call them, check they have the invoice on their ledger and ask the payment date. The squeaky hinge gets the oil. Eventually it gets easier to pay you than deal with your calls. Accounts payable people often have more discretion than they will ever let on about who gets paid when. They put the people who call higher up the list to save the aggravation

Escalations. Tell them that if you continue to receive late payment then you will have to withdraw credit and put them on advance payment.

Tell them you will have to 'take it further, which may include collection activities' or 'recoveryaction'. Deliberately broad.

Hold future work.

Write them a letter stating their account is in hold. Enclose a copy of the statement of account and invoices.

Next you will need to find a debt collection lawyer in your country. In the UK you fill out an online form and pay about £30 for a Letter before Action'... actually called something else now. Let the lawyer guide you from there.

Always send statements, always call.

That is how credit control is handled professionally. It is part of my job to manage this at several companies.

Jack up your price and offer a 5% discount if they you in full upfront before starting the work.

A horse's head in their bed works quite well.

Seriously though, people aren't paying because they're not paying -- not because they somehow forgot. They're assholes. So treat them like assholes -- stop providing services the second their payment is late. Demand payment up front. Do not fall for their gaslighting. Feel free to use the word "gaslighting" with them.

In some cases you just have to treat non payment as part of the cost of doing business. E.g. if you are performing services for a startup, assume they will flame out at some point and your last couple months invoices will never be paid. Price accordingly.

IANAL but also if you're in the US note that when a customer enters bankruptcy any payments made to you during the last 90 days prior to their filing may be "clawed back" if judged to be paid unfairly vs other creditors. So even if you did get paid by a crashing startup, you might have to pay that money back.

Edit: you asked about workflow. This is what we do: the second an invoice is overdue, send an email to their AP people, copied to the business contact (whoever you deal with in providing services) noting that the payment is overdue and asking when they expect to remit payment. How terse you make this depends on history. If they reply with some nonsense about check runs and things being sent out on a Thursday, respond with a message clarifying when you expect payment based on what they said. If no reply within a day or two escalate -- send an email to the business contact requesting a zoom call to "discuss their payment situation". So far the process has been in service of showing them that you take payment on time seriously and are going to grind their gears until you get paid. Often this will work. If not then escalate further. Whatever lever you have to pull, threaten pulling it (stop service, they don't own the copyright to code you wrote for them unless paid, etc). If you have no lever, well that's bad.

In the early days of my business, when we were more of a service company than a software company, I read this quote and it informed everything that we did:

>>> Nothing depreciates faster than the value of a service rendered. <<<

Always get paid in advance. We always had more customers than we could service, so we only worked on stuff that was already paid for. Customers became their own bill-collector when they were trained from contract signing that is how things work. Terms like "2/10 Net 30" will never make your life easier than simply getting paid first.

Reminder of Mike Monteiro's famous 2011 talk, "Fuck You, Pay Me":

* https://www.youtube.com/watch?v=jVkLVRt6c1U

Which even Adam Savage (of Mythbusters fame) references:

* https://www.youtube.com/watch?v=5Gie-cdO__U

For customers who repeatedly do this - put your prices up by 10%. Offer 10% discount for paying within net 15.