Sending out invoices can be pretty easy when everything, like client information, account numbers, and other details, is the same. However, when the client adjusts their company’s accounts payable details, it’s another story. Today, we are talking about red flags that a customer may not pay your invoice on time.
Red flags and solutions
Key Takeaways
- Check for changes in customer information before sending invoices; confirm contact details.
- If a company starts paying late, follow up via email and then by phone; consider legal action if the issue remains unresolved after 30 days.
- Negative press about a client can affect their ability to pay; staying connected can help clarify their situation.
- Maintain clear payment terms and update client information regularly to prevent payment issues.
- Use structured communication before involving collections to resolve unpaid invoices.
Red Flag: Did the customer information change on your invoice?
Solution
If you find that there is a change in ownership or the company has a new name, you want to contact the customer before sending the invoice to confirm the contact information for their accounts payable department is still correct. Be sure to ask about the extended terms if there is a new company.
Red flag: Has the company started to pay your invoice late?
Solution
If the company starts to pay late, contact them by email first. If there is no response within a few days, call the contact person in accounts payable. Mention to them that you are following up on a past-due invoice. If you find there is no response or guidance on how to process the invoice, make a note of the date. Allow 30 days, then have your business lawyer send a formal letter stating that you will refer it to collections if it is not paid by a specific date. Always add the date to the letter so you and they know when action will be taken.
Red flag: Has the client been mentioned negatively in the news or on social media?
Solution
If you find that your client has received negative publicity, you may want to follow up with your contact to see what is going on. If it is a client you worked with for a while, you may want to see if there is anything you can do to help them shine a positive light on their business. Staying connected will show your support for their business.
Some companies rely on others to function, and if some of their contacts are having issues, it may result in fewer sales for them, which in turn will lead to a drop in their income.
These are the most common red flags for why clients (affiliate) delay or do not pay. I hope this helps you with your collections issue. Please leave a comment below if you have any other solutions you’d like to share with our visitors. I would love to hear from you.
Frequently Asked Questions
Below are some additional frequently asked questions.
Before sending the invoice, contact the customer directly to confirm their accounts payable contact information is still current. If there has been a change in ownership or company name, also ask whether your payment terms and extended terms are still in effect with the new entity.
Start by sending a follow-up email. If you don’t hear back within a few days, call the accounts payable contact directly and reference the past-due invoice. If there is still no resolution after 30 days, consider having your business attorney send a formal collections notice with a specific payment deadline.
If you have made contact attempts by both email and phone without a satisfactory response, and 30 days have passed since the invoice became past due, it is a good time for your business lawyer to send a formal letter that includes the deadline for payment, by which the account must be paid before it is sent to collections.
Keeping your client contact information current, setting clear payment terms upfront, and staying aware of any changes in your client’s business or financial situation are all proactive steps. Establishing a consistent follow-up process for overdue invoices also helps reduce the risk of non-payment.
Not immediately. It is best to follow a structured process first — email the client, follow up by phone, and allow at least 30 days for resolution. If all attempts fail, having your attorney send a formal demand letter is a recommended step before pursuing collections.
Other Questions and Answers
When a business faces negative media coverage, it can lead to lost clients or revenue, which may trickle down and delay payments to its vendors, including you. Monitoring your clients’ reputation and staying proactive can help you catch potential collection issues before they escalate.
Negative publicity can signal financial trouble for your client, potentially affecting their ability to pay. Reach out to your contact to check in and show support. Staying connected keeps the relationship strong and keeps you informed about any potential impact on your payments.
Visit our other posts for more tips about accounts receivable.
9 Things Every Owner Needs To Know About Accounts Receivable
10 Ways a Bookkeeper Can Help a Business
