If you could always guarantee that customers would pay their bills on time, contracting might be the best job in the world. But hey, we live on planet Earth, and sometimes customers can’t — or won’t, pay their bills. And if you’re just in your first few years of contracting, you know that late payments aren’t just annoying — they can be a real threat to your livelihood.
So what can you do if clients can’t pay (short of ripping out their pavement at 3 am)? Well, you’ve got a few options, but ideally, you’d want to ensure the client can (and will) pay their bill before you even lift a shovel.
Let’s look at some practical steps you can take when you’re having a hard time collecting money from customers.
By the end of this article, you'll have a solid game plan to keep your cash flow steady and your business thriving, no matter what curveballs come your way. Let’s dive in and make sure you get the money you deserve without breaking a sweat.
Before you can fix the problem, you’ve got to know why it’s happening. Customers don’t just wake up one day and decide not to pay you (well, okay, some might). There’s usually a reason behind the delay. Knowing the cause helps you figure out the best way to handle it and prevent it from happening again. Let’s break down the common culprits.
Sometimes, the money just isn’t there. Economic hiccups, unexpected bills, or personal financial messes can leave your clients strapped for cash. It’s not that they don’t want to pay; they just can’t right now. Understanding this helps you decide whether to offer a payment plan or work out a new schedule.
Ever had an invoice go unnoticed or misunderstood? Maybe the client didn’t get the memo about the payment terms, or there was a typo in the bill. These mix-ups are more common than you think and can usually be sorted out with a quick chat. Spotting this issue early can save a lot of headaches and keep the cash flowing smoothly.
If a client is not happy with the work, they might hold back the cash. Whether it’s a minor detail or a major screw-up, addressing their concerns head-on can get the payment train back on track. Knowing this means you can focus on quality control and customer satisfaction to avoid these snags.
Sometimes, it’s just good old-fashioned human error. Invoices get lost in the shuffle, emails hit the spam folder, or the person handling payments is out sick. A friendly nudge can often clear this up.
Now we’re not saying you have to be Mother Theresa and forgive the debt, but you at least need to understand the reasons for the debt. By figuring out why payments are delayed, you can tackle the problem directly and get your cash flow back in shape.
Now that you understand why payment delays happen, let's talk about how to prevent them in the first place. Being proactive can save you a lot of time and stress down the line.
First things first — make sure everything is crystal clear from the get-go. Lay out your payment terms in plain language, and don’t be afraid to spell things out. When your client knows exactly what to expect, there’s less room for confusion.
If you want to know more about this, we’ve got a great article called 7 Things to Include in Your Contractor Quote/Proposal Template you can check out.
Don’t just send out an invoice and hope for the best. Set up a follow-up system to remind clients about upcoming due dates and overdue payments. This can be as simple as a quick email reminder or a phone call. Consistent follow-ups show that you’re on top of your game and serious about getting paid.
If you want to find out more about how to do this, check out our Workflow Email Automations Feature.
Everyone loves a good deal. Offering a small discount for early payments can be a great motivator for clients to pay up quickly. It might cut into your margins a bit, but it can also improve your cash flow and reduce the time you spend chasing payments.
You can take care of all of this in our Proposal Generator Engine.
Alright, so you’ve set up all the proactive measures, but what do you do when the payment is still late? It’s time to have a chat with your client. Here’s how to handle it like a pro:
When you notice a payment is late, don’t wait too long to reach out. The sooner you address it, the better your chances of getting paid without any issues.
If your client is having trouble paying the full amount at once, it might be time to negotiate a new payment plan. This can help you get at least some of the money owed and show your client that you’re willing to work with them.
Not only do payment plans help with collecting overdue payments, but they can also be a great tool to attract new clients.
When payments are significantly delayed, sometimes you have to take some not-so-fun, but effective formal steps. Here’s what you can do:
A formal demand letter clearly states the amount owed, the due date, and the consequences (usually Small Claims Court or collection agencies) of non-payment.
If the demand letter doesn’t work, you can use small claims court. In some states, it might be called the Justice Court, Magistrate Court, or something similar.
As a last resort, hire a collection agency.
Whatever option you choose, always stay professional. Getting emotional or confrontational can damage your reputation and harm future business opportunities. Always keep communication respectful and stick to the facts.
Collecting money from customers can sometimes feel like pulling teeth, but with the right strategies, you can make sure your business stays afloat and thrives. From understanding why payments are delayed to setting up proactive systems and knowing when to take legal action, you’ve got the tools to handle late payments like a pro. And remember, using tools like AK Dash’s Workflow Email Automations and Proposal Generator Engine can streamline these processes, keeping your cash flow steady and your stress levels low.
Ready to take your whole pavement business to the next level? Try AK Dash for free today. Find out for yourself how easy it is to optimize every part of your business, from driving clients, to driving projects, to driving finances. From there, you’ve got all the tools to build a real legacy your family will be proud of — you can do it, and we can help.