How to get paid on time

If you’ve accepted not getting paid on time as just “part of doing business,” it’s time to change that mindset. The truth is, you can train your clients to pay on time by setting clear expectations, enforcing your terms, and following up the right way.

Getting paid on time isn’t about luck; it’s about having a clear and structured system. In this guide, we will show you how to vet clients and quickly spot the risky ones, how to set clear payment terms that leave no room for confusion, and how to follow up effectively so you’re not stuck chasing unpaid invoices.

Let’s start by figuring out how to tell the difference between clients who pay on time and those who are likely to give you a headache

First, know who you are dealing with

Whether you’re just starting a small business or you own one, before working with a new client, ensure they’re financially reliable. Here’s how to protect yourself from clients who aren’t trustworthy: 

• Run credit checks on new clients before extending payment terms: Check your client’s financial history with services like Equifax or Experian to help you spot red flags like outstanding debts or poor credit scores.
• Request trade references from other supplier: Ask for at least two or three trade references from people they’ve worked with, and follow up with a call or email to verify their payment history.
• Check company registration details and directors: Use official government databases to verify the client’s company’s registration status and financial standing. 
• Consider using credit rating agencies for larger contracts: If you’re about to sign a long-term or high-value contract, agencies like Kroll Bond Rating Agency (KBRA) provide detailed financial analysis of businesses, helping you assess their ability to pay.
• Document all communication and agreements: Keep records of signed contracts, invoices, and email conversations to protect yourself in case of payment disputes.
• Research payment history and business reputation: Look up reviews, testimonials, and complaints from previous business partners. Industry forums like LinkedIn can also provide insights into how they’ve treated former work connections.

Taking the time to vet potential clients reduces your risk of not getting paid on time and guarantees you work with businesses that respect your time and effort.

Additional resource: 9 small things you can do for your business.

Set out clear terms in the contracts

Want to know how to get paid on time? It all starts with a well-written agreement because it clearly states your payment expectations. Here’s how to protect yourself from not getting paid on time:

• Specify payment deadlines (7, 14, or 30 days): Your contract should clearly define when payments are due whether within 7, 14, or 30 days of the invoice date.
• Detail late payment penalties and interest charges: Let your clients know that missing a payment has consequences. For example a flat late fee (e.g., $50 for overdue invoices) or Interest charges (e.g., 2% per month on outstanding balances).
• Include clear payment methods and bank details: Avoid late payments by ensuring your contract includes your accepted payment methods (e.g., bank transfer, credit card, PayPal) and business bank account details.

Further reading: How to track expenses as a small businesses.

• Outline dispute resolution procedures. Even with a solid contract, payment disputes can happen. So, to easily resolve issues, state how disputes should be raised (e.g., written notice within 7 days of the invoice date) and who will mediate (e.g., direct negotiation, legal arbitration).
• State early payment incentives if applicable: If you’re dealing with slow-paying clients, consider offering incentives such as a small discount (e.g., 2% off for payments made within 7 days) or bonus perks for repeat customers who consistently pay early.
• Define milestone payments for larger projects: For big projects, breaking payments into milestones protects you from working for weeks or months without payment. A good structure includes:
  • 30%-50% deposit upfront before any work begins.
  • Progress payments after completing key phases.
  • Final payment upon completion and approval.

• Include right to suspend work clause for non-payment: If a client stops paying, you need the right to pause services until they settle their overdue invoices. Adding a “work suspension” clause ensures you’re not stuck doing more work for a client who isn’t meeting their payment obligations.

On a final note, setting clear payment terms before you start working with a client ensures you create a structured agreement that helps you get paid on time.

Be open, honest, and professional

When it comes to how to get paid on time, strong relationships and clear communication matter just as much as contracts and invoices. If you’re professional and easy to work with, clients will be more likely to prioritize your payments. Here’s how you can stay professional and avoid the frustration of not getting paid on time:

• Send invoices promptly after work completion: Delaying invoices often leads to delayed payments, so as soon as you finish a job or reach a milestone, send the invoice immediately.
• Provide detailed breakdowns of charges: Your invoices should be clear and itemized so there’s no confusion. Bookipi offers an invoice generator that lets you create invoices with all the necessary details, speeding up payments.
• Maintain clear communication channels: Provide a direct contact for billing inquiries, whether that’s you, an accountant, or an assistant.
• Address disputes quickly and professionally: If your client raises a concern, listen to their issue and acknowledge their perspective. Then offer a fair solution such as finding a reasonable compromise.
• Keep thorough records of all transactions: Store copies of signed contracts and agreements, invoices and payment receipts, and email conversations to provide proof and protect yourself if disputes arise.
• Build strong relationships with clients’ accounts payable teams: For larger clients, the person who hires you may not handle payments. So, building a good relationship with their accounts payable (AP) team with a simple introduction email or regular check-ins can increase your chances of getting paid on time.
• Provide regular statements of outstanding amounts: Send monthly account statements or quick reminders of outstanding balances to ensure your invoices stay top of mind for clients.

Remember, when clients see you as organized and easy to work with they’re more likely to prioritize your invoices.

Additional reading: 7 tips to make your small business stand out.

How to get paid on time: a step-by-step guide

Review & make sure invoice details are correct

One of the most common reasons for a late invoice payment is the wrong invoice details. Make sure that every detail from your company’s details to your client’s details to your payment instructions are all correct.

An invoice is meant to represent a transaction but if the details of the transaction are wrong, it won’t work.

Read over the invoice carefully before you send it.  If can be hard to correct information on an invoice like incorrect prices or the wrong due date, once an invoice is sent.

Make sure that your invoice is easy to read before you send it.

If the customer can’t clearly see what they need to pay you, they could pay you incorrectly.

Ask for a deposit or prepayment where appropriate

Asking for a deposit before you begin the job is a common practice if you invoice large amounts.  

Even if the client fails to pay you, you’ll still have some of what they owe you to help you cover expenses before you get the rest of your money.

You can also add several payment milestones throughout the project. This means that if the client fails to meet one, you can halt the project before you spend too much time and money on the project.

It’s also common for some types of businesses to ask for full payment before starting the project.

This is the safest method for ensuring you get paid but if its not common practice in your industry, you might want to avoid it so you don’t come across as difficult to work with.

The most important lesson to always keep in mind is that you should always look after your customers.  That doesn’t mean letting them take advantage of you but you won’t gain anything by coming across as hard to work with.

You can request deposits from clients in Bookipi Invoice web app and track payments in one spot.   

Send the invoice straight away

One simple way to encourage your customers to pay your invoices faster is to issue your invoice immediately after you’ve completed the job.

When you issue the invoice straight away, the project you’ve completed is fresh in the mind of your client.

They’re more likely to pay you earlier than the due date of the invoice.  Clients are less likely to question the work you’ve done for them.

Sending invoices straight away will also demonstrate that you’re a professional business operator and that you shouldn’t be taken advantage of.  Easily send invoices using Bookipi Invoice on web or mobile app.  

You’re also less likely to make mistakes on the invoice about the details of the project if you issue it straight after completing your work.

Accept more payment methods like online card payments

You might want to receive the payment in a certain format.  However, that might not be an easy way for your client to pay you. 

At the end of the day, it is better that you get paid than not get paid because you wanted them to pay you a certain way.

Offer multiple ways for clients to pay you including card payments.   

You can make it known to them that you would prefer them to pay you in a certain way because they’ll generally be happy to pay you that way. You can even offer a discount if they pay you in a certain format to encourage them to use that payment method.

Offer a discount for early payment

If you want your clients to pay earlier than the due date, you can offer a discount if they pay in advance of the due date.

It doesn’t have to be a massive discount, even just two percent can be enough to motivate your client to pay earlier.

If most of your clients are small businesses, a good portion of them will use any opportunity for a discount that they can get. Including an incentive will also encourage clients to use you again in the future.

Remember that business is all about building good relationships and offering something positive like a discount can be worth it in the long-term.

Include late fees in your invoice terms

If you really want to deter your clients from not paying invoices on time, you can include a penalty for all payments made after the due date.

The threat of having to pay more if they pay late is usually enough to ensure that clients pay their invoices.

To add late fees, you must clearly write this into the payment instructions or terms of conditions on your invoice.

For big jobs, you’ll want to write this into your contract. It’s best practice to verbally let you client know about late fees before they make a formal order with you.  You can specify late fees in advance on pro forma invoices, estimates or business proposals.   

Springing late fees on clients without having proof that it was clearly indicated before a transaction began, doesn’t help your business look professional.  

Follow up on late payments

Don’t wait for your clients to pay you.  Follow up a late payment from clients as soon as an invoice is overdue.

You can and should ask clients for payment if an invoice is overdue.  Send clients an email even if it’s a day after the due date.  You provided the services/products and they need to pay you for it. Be polite and direct with the client while doing this because at the end of the day, you don’t want to appear unprofessional.

There might be an issue with the invoice which is preventing them from paying you so don’t automatically assume that the client is at fault.

7 tips for small businesses to get paid on time

One of the biggest challenges for small business owners is not getting paid on time, which can disrupt cash flow. Here are seven practical tips to help you stay on top of your payments.

1. Use accounting software to automate invoicing

Accounting software like Bookipi helps you automate the invoicing process and reduce manual errors by setting up recurring invoices and tracking payments in real time. You can also grab our free templates to quickly create professional invoices without starting from scratch. 

2. Set up automatic payment reminders

Instead of manually chasing clients for payments, let automated reminders do the work by scheduling alerts before and after payment due dates.

3. Offer multiple payment methods

Make it easy for clients to pay you by offering multiple options, such as, bank transfers (ACH or wire), credit and debit card payments, or online payment platforms like PayPal or Stripe.

4. Consider factoring or invoice financing options

Invoice factoring means a company buys your unpaid invoices at a discount and collects payment directly from your clients. While invoice financing means you borrow money against outstanding invoices but remain responsible for collecting payment.

5. Implement a clear credit control process

Only offer credit to reliable clients to reduce the risk of not getting paid on time. Set strict credit control policies by defining who qualifies for extended payment terms and establishing a clear escalation process for overdue invoices.

6. Monitor cash flow regularly

Set up a system to monitor your incoming payments and identify clients who regularly pay late. This system allows you to adjust their terms accordingly before it’s too late.

Further reading: 10 ways to use AI for small businesses.

7. Consider upfront deposits for new clients

For new clients, request an upfront deposit (e.g., 50% upfront, 50% on completion for services) or milestone-based payments to reduce the risk of clients disappearing without paying.

Summing it up, late payments are a common problem for small businesses, but by using the right tools and clear processes you can stay profitable and ensure timely payments.

Read next: 6 bookkeeping tips for small businesses.

How to follow up on unpaid invoices

Even after setting clear contracts and sending your invoices on time, some clients will still miss payment deadlines. To ensure you get paid on time without damaging your client relationships, follow these best practices:

Send a friendly reminder email one week before the due date

A week or few days before your payment is due send a polite email that restates the invoice due date and amount, and a copy of your invoice as an attachment.

Send a formal reminder letter after payment becomes overdue

If the invoice passes the due date without payment, send a more serious follow-up that clearly states that the invoice is overdue and specify any late payment penalties or interest charges.

Schedule weekly follow-ups

If your formal reminder is ignored, use invoice apps to keep the pressure on with weekly follow-ups that re-emphasizes the amount due, payment terms.

Maintain a professional tone throughout

Avoid aggressive or threatening language, as this can harm relationships and make your clients less likely to cooperate. Instead, be firm but polite by reinforcing your payment terms and staying open to a conversation.

Consider offering payment plans for struggling clients

If a client is genuinely struggling, offering a payment plan such as smaller installments can help you recover your money while maintaining a positive business relationship.

The key to getting paid on time is consistent follow ups and having a structured approach ensures you recover payments without damaging client relationships.

Additional resources: 15 invoicing mistakes to avoid with your small business.

What to do if you haven’t been paid

No matter how well you run your business, not getting paid on time is a reality you’ll likely face at some point. Here’s a step-by-step guide on how to get paid on time, even when clients aren’t cooperating.

Immediate actions

• Review all payment communications: Before jumping to conclusions, double-check all the emails, invoices, and reminders you’ve sent. Verify that you properly formatted your invoice’s and sent it to the right person. 
• Contact client’s accounts department directly: Many times, invoices get stuck in internal approval processes. So, if your main contact is unresponsive, consider reaching out to the accounts payable (AP) team directly to fast-track your payment.
• Send a formal demand letterL If your emails and calls aren’t getting results, it’s time to turn up the pressure with a formal demand letter. It should include:
  • The outstanding amount and due date.
  • A final payment  deadline (e.g., within 7 days).
  • A warning that legal action may follow.
• Consider stopping services until payment is received: Still no payment? Pause all work immediately. Let the client know that you won’t continue providing services until their outstanding balance is cleared.

Legal Options

• Engage a debt collection agency: While debt collection agencies charge a percentage of your unpaid invoice, working with them can eliminate the stress of chasing payments.
• File small claims court proceedings: For invoices under a certain amount (e.g., $2,500 to $10,000 in the United States), small claims court is a fast and affordable way to get paid.
• Seek legal advice for larger amounts: If you’re owed a significant sum, consult a business attorney. They can help you negotiate a settlement to recover as much money as possible or guide you through filing a lawsuit. 
• Consider a statutory demand: A statutory demand is a formal legal request for payment. If ignored, you may be able to force the client into bankruptcy or liquidation.
• Use late payment legislation: Many countries have laws protecting businesses from late payments. For example, under the Australian Consumer Law (ACL), Australian businesses can charge interest on late payments if specified in the contract.

Preventing failed payments in the future

Strengthening your payment terms can be a great way to boost your financial stability and peace of mind. Start by reviewing your contracts and invoices to see if you can shorten payment deadlines. It’s also a good idea to have clients confirm they’ve read your payment terms before you begin working together. This helps ensure everyone is on the same page from the start.

To further protect your business, consider implementing a few more strategies. For instance, you might run credit checks on new clients and set limits for those who pose a higher risk. Payment insurance can also be a lifesaver for large invoices, providing compensation if a client defaults. Asking for advance payments or deposits can help secure part of your payment upfront, while setting up direct debit mandates for recurring clients can make the payment process smoother and more reliable.

Read next: 5 ways to take your small business to the next level.

To wrap it up, If you’re not getting paid on time, take action immediately! The longer an invoice sits unpaid, the harder it becomes to collect. Additionally, stay firm but professional by sending reminders and taking legal action when necessary.