What to do When a Client Won’t Pay- On Time or at All


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One of the most stressful parts of owning a business is dealing with clients who are consistently late paying or who simply won’t pay at all. It can send you on an emotional rollercoaster—ranging from hurt (Do they feel like I’m not worthy of being paid?) to outright anger (How dare they not pay me what I’m owed!). Having a plan for how to move forward when you are in this situation will help get you to stop avoiding confrontation and finally take action (it is just business, after all).

Here are a few tips and best practices to follow when it comes to dealing with overdue payments.

1. Three strikes, you’re out

It can be awkward to confront a client when they are late paying—especially if it happens all the time. This is a general guideline that I use to track down payments:

1) If you use Quickbooks or another accounting program, send the first overdue payment reminder using their system the day after the invoice was due. The subject should simply say, “ OVERDUE INVOICE REMINDER,” and reference the overdue invoice number. Kindly remind the client that payment is overdue and remind them how they can pay.

2) When the account is seven days overdue, my bookkeeper will send an outstanding payment reminder email asking when we can expect payment. If you don’t have a bookkeeper, create a business accounting email to use. That way you create some separation, and it looks more professional. Nobody needs to know you are sending the email yourself.

3) When the account is more than ten days overdue, I will either call or text the client myself, depending on how that client best communicates. From my experience, calling or texting works better than email. It is not my favorite thing to do, but it is necessary. The goal of the call is not only to get paid quickly, but also to get feedback. Some clients use accountants to pay their invoices, and they need invoices sent 30-60 days in advance. In that case, you may need to adjust invoicing based on the feedback. There has only ever been one instance in my ten years of running a business that this system has not worked, and that was because the company went bankrupt. You can ask for payment of an invoice politely, but firmly using the below script.

Hi (XX),

I’m just checking in on your payment for this month. We have sent a few notices with no response. Mind letting me know when we can expect payment? As a small business, we have the policy that all payments are due on the XX of the month to ensure that we can cover payroll and operating expenses. You can easily pay directly online for free by just clicking the “Pay Now” option on your invoice (or tell them how they can pay quickly). I would really appreciate you paying on time. Is there something we can do to make the process easier for you?

2. Final straw call

If you are still not paid after the three strikes system, you need to pick up the phone and tell the client that you really value their business, but you have to solve the problem of late payments in order to continue working with them. Asking for payment in advance is a reasonable request.

3. Decide your bottom line

Ultimately, you have to decide if continuing the relationship is worth the hassle of chasing down payments. If it isn’t, you can send a termination letter via email. There are times when you will be left with no choice but to take your client to small claims court, but from my experience, I’ve never felt it was worth my time or energy.

4. Offer alternative payment options

Sometimes clients are difficult, but usually they just need things to be made easy for them. Credit cards and PayPal charge large fees, but they are a great option as a last resort. For all new clients going forward in my business, I am asking for a credit card to put on file as a backup payment. It will be stated in my contracts that credit cards will be charged after a certain date with a 3.5% processing fee if payment via check or our free ACH option hasn’t been received.

5. Charge a significant late fee

We charge a 10% late fee for any late payments. This is written in their contract and is verbally stated to clients when we are reviewing terms. It is also written on every invoice.

6. Nip it in the bud

Do not let more than one month go by before taking action on a client who hasn’t paid. You don’t want to find yourself in the position of having to collect more than one month’s payment.

The best advice I can possibly give is to plan in advance for unexpected circumstances—this includes not getting paid, losing a client, or unforeseen costs. While it may be tempting to cash out every single month—I did it for the first six years of my business!—it is certainly not the smart thing to do. Decide right now what baseline percentage you can save in a business savings account each month on top of your tax savings, and stick to it. That way, when you find yourself in a situation where you can’t collect a payment, it won’t affect whether or not you can make payroll and/or pay your bills.

About Molly

Molly Schoneveld has over a decade of experience in the entertainment industry, beginning her public relations career at PMK/HBH (now PMK/BNC), where she worked with A-list talent, on Oscar campaigns for directors, producers and films, and served on the Sundance Film Festival team.

She co-founded The Storied Group in 2008 to offer a unique point of view that incorporates her entertainment industry roots, extensive knowledge of the media landscape, and passion for finely curated lifestyle and hospitality brands like Golden Door, where she has lead the PR efforts since their relaunch in 2013. She continues to form meaningful partnerships with synergistic brands, garnering top-tier media coverage, and bringing relevant celebrities, tastemakers and influencers to the property. She bridges the gap between entertainment and lifestyle, understanding the work that goes into building a personal brand with influence, and also how influencers can help build brands. Though she is well-versed in traditional public relations, Molly and her team have a very modern and creative approach.

Molly has built a solid reputation providing great attention and care to every client and has proven success in getting results. She has secured cover and feature stories in domestic and international publications, including Architectural Digest, Vogue, Vanity Fair, Veranda, InStyle, House Beautiful, Departures, The New York Times, Robb Report, Sunset, as well as numerous television segments with a national audience. Molly’s passion for hotels, interior design, and luxury lifestyle brands has made The Storied Group a leader in the lifestyle and travel PR space.

Molly Schoneveld

Molly Schoneveld