I've worked in industries where customers don't like paying invoices.
Fortunately, the widget we sell is good enough they'll want to buy again within a few months. So our rule is pretty simple - we won't send another batch of widgets until they've paid the overdue invoice for the last batch.
And if they've dicked us around too much in the past - we send them a proforma invoice. They can pay before we dispatch.
> just let it slide because the relationship feels more important than the cash
What use is a 'relationship' with a customer that doesn't pay?
Sure, you might hope to parlay a good relationship into larger orders in the future. It's natural to have dollar signs cloud your vision when you're talking to someone at a well known multi-billion-dollar company. You hope this person ordering $500 of widgets for a prototype will place an order for $500,000 of widgets in due course.
But the truth is, for every person with the authority to place that huge order there are 100+ interns building one-off prototypes during 3 month summer internships. If your contact can't get a $500 invoice paid, then you're not talking to someone with the authority to spend $500,000.
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.
> 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.
Depending on customer personality, they may or may not contact you. It's also possible that if they're having money issues that they are freaking out, frozen, and scared to reach out. Though I'm thinking more of very small businesses here where it's more of a personal thing than a corporate thing.
On your payment reminder notes, when it really is late, you can consider putting in some wording that hints at "we know sometimes small businesses can have financial issues" and genuinely suggest there are ways you can help. If it's a small friendly business in a scary time, they might be genuinely relieved that you show that you care... while simultaneously, if it's a business that isn't in financial trouble at all, and was just trying to stretch out their Net 30 to earn extra interest, they may be so outraged by the implication that they are "poor" they they will pay up quickly just to show they are not poor.
It won't help every case, and this only happened very very rarely to me (so I'd defer to the judgment of others). But depending on your customers, this could be a useful approach to have in your toolkit.
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.
larger customers expect net-terms (e.g. net-30) and have monthly accounts-payable processes. No customer pays instantly.
my strategy is to raise prices, then offer a discount for customers who pay net-7 and even greater discount if they pay in advance.
fun story: I once got $400,000 from a famous venture capital firm who was buying a service from my company and they paid 6 months in advance for 5% discount. In other words, dilution free financing from a VC fund !!!
Anyone else feel like this post is AI generated? I've been seeing a lot of posts like this on reddit programming subs and now it's happening on HN too... The pattern is:
- some generic context, containing a bunch of em dashes of course, with a vague background that isn't tied to a specific incident
- a claim like "most ___ I've talked to about this" within the first few sentences.
- ends with a series of questions as though they're soliciting more input
I feel like these all must be coming from a single person who's trying to automate market research and sell the data or something
The discussion the post has created is still valuable even we don’t know the motivations behind the post. That was true before LLMs as well (people lie and exaggerate on the internet all the time).
Personally I give the benefit of the doubt to a post I suspect of being LLM if there isn’t an obvious harm (for example, the user shilling a product in the comments). There are still some benign reasons to use LLMs for posts like these.
Yep. Grammar and structure is too perfect. "Just let it slide" shows a disconnect. Also the title felt completely out of place to me for HN, I clicked it out of curiosity to see. Good advice given nonetheless.
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.
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.
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.
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."
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.
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 don't have much advice here because ever situation is different and the sensitivies of asking is different with every organization. What's worked for me is being absolutely direct and honest in the situation and the urgency of needing pay. Often times the other side doesn't realize how much it affects you, and shattering that illusion is what's needed. In other words -- you kinda need to make them feel like an asshole for not paying you. Sometimes it doesn't work, though. At some point you will need to raise it as a legal issue and begin refusing work.
I do Net 30, so I'd be out 2 months worth of services. IMHO I specialize in keeping things painless when people work with me so I'd rather be out 2 months of revenue than a customer encountering game changing pain because I was ultra-harsh. I haven't made enough money to switch to accrual accounting so this is okay. I'm sure a day will come when I regret it, but it's been fine so far.
Include clear payment terms and penalty interest. For me, this looks like 30 payment window, reminders fortnightly there after, and a money claim lodged in the small claims court at 90 days. You’ll almost certainly get your money ahead of court appearance (assuming they haven’t gone bankrupt).
Switched to requiring 50% upfront for any new client work. Lost a couple of prospects but completely eliminated late payment issues. For smaller projects I just go full payment upfront now. The clients worth keeping never push back on it.
I require payment upfront before work starts. Simply make it clear you are not a bank and are not extending credit. If your invoices are small setting up a recurring credit card payment is an option with various payment platforms.
Put a time-bomb in there for amount of days after completed work (if net30, 31 days). If switch isnt flipped, thing obviously and annoyingly disables itself for "NONPAYMENT".
In general, Front-end loading with a nonrefundable 60% deposit, up to 90% if settlement delay exceeds 30 days next deal, and 180% of expected normal rates if they still haven't caught upper managements attention by strike three.
Peppering your trademark in the API and code-base is good if things get nasty.
Sometimes, just feed grifters to the lawyer with the completed contract deliverables highlighted. If you are risking over 15% of annual revenue on any deal, your company will not survive on luck very long. Risk mitigation is the primary role of CEO. =3
Check your local law. In some jurisdictions, you can charge interest, or penalties. You can be gentle about it - give fair warning, reminder that intrest is starting to accrue, etc. But customers don't generally want liabilities to increase, so will prefer to pay before extra costs are incurred.
It depends a lot on your relationship with the customer as well, I guess. Some may get butthurt about it, for others, your relationship is with a person in a different dept to the people organising the payments, you can send interest notices to the finance dept without worrying the person who wants your services.
50 comments
Fortunately, the widget we sell is good enough they'll want to buy again within a few months. So our rule is pretty simple - we won't send another batch of widgets until they've paid the overdue invoice for the last batch.
And if they've dicked us around too much in the past - we send them a proforma invoice. They can pay before we dispatch.
> just let it slide because the relationship feels more important than the cash
What use is a 'relationship' with a customer that doesn't pay?
Sure, you might hope to parlay a good relationship into larger orders in the future. It's natural to have dollar signs cloud your vision when you're talking to someone at a well known multi-billion-dollar company. You hope this person ordering $500 of widgets for a prototype will place an order for $500,000 of widgets in due course.
But the truth is, for every person with the authority to place that huge order there are 100+ interns building one-off prototypes during 3 month summer internships. If your contact can't get a $500 invoice paid, then you're not talking to someone with the authority to spend $500,000.
> What use is a 'relationship' with a customer that doesn't pay?
The most important take-away you’ll learn in this thread, OP. Sometimes it’s a hard lesson to learn, but the sooner you learn it, the better.
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.
> 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.
Depending on customer personality, they may or may not contact you. It's also possible that if they're having money issues that they are freaking out, frozen, and scared to reach out. Though I'm thinking more of very small businesses here where it's more of a personal thing than a corporate thing.
On your payment reminder notes, when it really is late, you can consider putting in some wording that hints at "we know sometimes small businesses can have financial issues" and genuinely suggest there are ways you can help. If it's a small friendly business in a scary time, they might be genuinely relieved that you show that you care... while simultaneously, if it's a business that isn't in financial trouble at all, and was just trying to stretch out their Net 30 to earn extra interest, they may be so outraged by the implication that they are "poor" they they will pay up quickly just to show they are not poor.
It won't help every case, and this only happened very very rarely to me (so I'd defer to the judgment of others). But depending on your customers, this could be a useful approach to have in your toolkit.
>>> 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.
my strategy is to raise prices, then offer a discount for customers who pay net-7 and even greater discount if they pay in advance.
fun story: I once got $400,000 from a famous venture capital firm who was buying a service from my company and they paid 6 months in advance for 5% discount. In other words, dilution free financing from a VC fund !!!
- some generic context, containing a bunch of em dashes of course, with a vague background that isn't tied to a specific incident
- a claim like "most ___ I've talked to about this" within the first few sentences.
- ends with a series of questions as though they're soliciting more input
I feel like these all must be coming from a single person who's trying to automate market research and sell the data or something
Personally I give the benefit of the doubt to a post I suspect of being LLM if there isn’t an obvious harm (for example, the user shilling a product in the comments). There are still some benign reasons to use LLMs for posts like these.
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.
- 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.
You gotta be a utility and have a service you can cut off.
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.
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.
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."
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.
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.
Good luck!
Cutomers are mid-sized companies (60-600 employees, give or take) all based in Europe FWIW.
1. We schedule payment up front before we do work (retainer), but we do not force payment due to emergency or cash flow issues of companies.
2. After 2 weeks we start charging compounding interest on the payment.
3. If 2 months go by and we have not been paid, we stop all services, and the outstanding invoices continue to accrue interest till paid
* https://www.youtube.com/watch?v=jVkLVRt6c1U
Which even Adam Savage (of Mythbusters fame) references:
* https://www.youtube.com/watch?v=5Gie-cdO__U
Firms paying on time get discounts and other perks...make it a top headline or blurb in all your marketing...
Put a time-bomb in there for amount of days after completed work (if net30, 31 days). If switch isnt flipped, thing obviously and annoyingly disables itself for "NONPAYMENT".
Peppering your trademark in the API and code-base is good if things get nasty.
Sometimes, just feed grifters to the lawyer with the completed contract deliverables highlighted. If you are risking over 15% of annual revenue on any deal, your company will not survive on luck very long. Risk mitigation is the primary role of CEO. =3
"Mike Monteiro: F*ck You, Pay Me"
https://www.youtube.com/watch?v=jVkLVRt6c1U
Here is one company's experience (UK focused): https://www.revk.uk/2026/03/late-payments.html
It depends a lot on your relationship with the customer as well, I guess. Some may get butthurt about it, for others, your relationship is with a person in a different dept to the people organising the payments, you can send interest notices to the finance dept without worrying the person who wants your services.