How to Collect Payment from Customers Who Won’t Pay?

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📝Key Takeaways:

  • We have filtered the best eight ways that you can choose to get your service amount from your clients.
  • Understand the importance of financial documents that can serve as legal proof if things go downhill.

Learn how to collect payment from customers who won’t pay you the requested amount. Understand the different vital tactics that you can use to ensure smooth cash flow.

Are you looking to collect your payment from your client who is not paying you?

Is your client skipping tracing, and is it hard to locate?

Well, you are not alone in the process. Hundreds of businesses are trying to get their money back from customers, partners, or other entities who are not paying back the requested amount for the product or the services.

So, how to collect payment from a customer who won’t pay?

Multiple ways can be followed to collect payment from customers who are ignoring your calls, missing in action, or using different tactics to increase the payment date.

So, without further ado, let’s start with the learning process.

8 Ways to Collect Payment from Customers

1. Through e-invoices

Electronic invoicing is the most frequently used professional service by the modern age of business owners to ask for payment from clients. You can use emails to send your invoices or use other digital platforms to convey the message to your clients.

How to collect money from customers online

Using paper invoices can be expensive and time-consuming between addressing envelopes, printing, and sending them via mail. 

You can use InvoiceOwl, which enables business owners to streamline the payment collection process using the online payment solution provided by the software.

Different powerful software provides pre-built templates for creating professional invoices that can paint a professional image of your brand in the customer’s mind. You can send an e-invoice directly to the customer’s inbox with the secure online payment button.

You can give your customers multiple options for processing their payments, minimizing the hassle of using credit card payments or different digital payment methods.

Sending electronic invoices can help you reduce the administrative tasks in your financial management, and you can track the details of different invoices and overdue payments within a few clicks.

Send Invoices Quicker & Get Payments Faster

Invoices that gets you payment faster without any delay. Create and send invoices as soon as you complete your work.

2. Send follow-up reminder emails

You can also send quick reminders for the due payments and the invoice processing, which can increase the chances of getting back the money from your customers who forgot about the due payment.

Sometimes, the customers might forget about the invoice or not check their inbox, which can result in your payment processing.

But sending a reminder email for processing the payment can help you get back the due balance and ensure that you don’t lose out on your money.

You can schedule the reminder emails using professional financial management software that can remove the hassle of managing the process. 

You might get a higher open or click-through rate in a follow-up reminder email compared to the actual invoice emails. You must analyze the best time for your clients to check their emails and place the automated reminder email in the queue.

3. Ask for payment upfront

You can ask for full payment or at least half of the payment that can cover your service job expenses. Once you collect payments from your clients, you can avoid the fear of having your payments blocked. 

Asking for upfront before starting the work can build trust between the two parties and ensure minimal chances of the client delaying or refusing to pay your full-service amount.  

You can provide early payment discounts to encourage the clients to pay an advance payment and avoid late payments. It can simplify the collecting payments process easier and simpler for your financial team.

If you manage a long-term project, you can also collect money from clients in different phases of service completion.

You can provide your customers with safe and secure online payment portals that can process credit card payment, bank transfers, or various payment methods directly to your bank account.

Upfront customer payments can help you bypass late fees, delays in paying invoices, cash flow issues, or non-payment beyond the due date.

4. Schedule payment in advance

You can ask for advance money that can help you avoid the risk of encountering situations where the client doesn’t pay you the due and suddenly disappears from different communication channels.

how to collect money from clients who won't pay

Once the client pays the advance before they avail of your service, you don’t need to worry about your payment being stuck with the client. You can schedule the advance payments that can automatically charge the customers on a daily, monthly, yearly, or hourly basis.

The future invoices can convey to the clients that they need to pay in advance to continue the service you are providing them.

Scheduling your payments in advance is like charging subscription fees that can help you provide your clients with contractor services for a limited duration. You can continue the service process if the client continues the payment cycle.

Once the payment stops, you can halt your services. You can streamline the payment process and set the payment terms before kick-starting your service process.

Adopting the advance payment protocol ensures a steady cash flow for managing your business expenses. You remove the hassle of hiring collecting agencies to retrieve your service payments from defaulter clients.

Advanced payment methods can work for different service business types and might not be suitable for specific businesses that don’t have a long-term contract.

If it’s not suitable, you can opt to request payments upfront before starting your service.

5. Share your payment expectations

Apart from asking for upfront or advance payments, you can state your payment expectations to the customers, which can help you maintain transparency and avoid future misunderstandings or issues.

Whether you want them to pay invoices in advance or later when the service is completed, you can communicate the message to collect customer payments with mutual understanding.

You can create a professional estimate that can state your expected payment amount and the preferred payment method.

Being a small business owner, you can sign a legal agreement with the customer once the customer approves the estimate. 

Setting up the basics and mentioning minute details about collecting payments can help you avoid future small claims court actions and make the customers liable for future discrepancies.

6. Promote contactless payment

Promote contactless payment

Focus on removing the dependencies on manual or cash payments that involve multiple steps before the sum reaches your bank account. Integrate a professional financial management system to help you promote contactless payments and attract quick and reliable online payments.

The amount can quickly be transferred to your bank account using the right payment processor in your financial management ecosystem.

Ensure that the financial management service provider delivers excellent security to your online payment ecosystem, making the clients trust the payment processing.

You can provide quick payment receipts to the clients that can be used as proof of payment for your business and the clients. 

Promoting contactless payments for small business owners can help you to avoid the excuses made by a few customers of not being able to reach your office physically to complete the due payment.

Multiple NFC-based payment terminals can provide your support for accepting contactless payments where the customers pay using phones or contactless credit or debit cards.

But you can contact different collection agencies if the customers don’t pay the dues even after multiple tries.

7. Reach out to a collection agency

Collection agencies aim to collect payments from the customers and ensure payment processing for your service business.

They have methods of extracting the payments to cover the unpaid invoices from the defaulters.

A professional collections agency can deliver quick results that can help you cover your expenses, earn profits, and ensure you bypass different cash flow problems.

Service businesses reach out to collection agencies now and then so you can rely on them to help you collect payments from customers and escape the hassle of repeatedly reaching out to the defaulters.

But if they don’t deliver the desired results and fail in collecting money, you can pursue legal action against the defaulter.

8. Take legal action

How to collect money from client format

Connect with your legal team and collect valid evidence like estimates, invoices, or purchase orders that can help you build a strong legal case. You can sue the defaulters in the local courts, which can help you increase the chances of getting your due amount back, plus the extra penalties for late payments.

You can also give a prior legal warning to your customers about the legal action that might help you receive the requested service amount from the defaulter. 

These listed methods can be effective if you follow the procedure systematically. Now that you have understood the importance of different financial documents like invoices and estimates, you must ensure access to professional software that can help you create professional documents.

The software can also improve your accounting and financial management and deliver a great experience to your potential clients. You can check the history quickly and streamline your business operations with finesse.

But the accounting software industry was valued at $11.9 billion in 2020, and the numbers are rising dramatically. So, out of a hundred software in the industry, only a few can satisfy your business requirements and can streamline your service business.

Our team has filtered the best financial management software to help you create quick and professional financial documents with finesse.

Want to Create Professional Invoices And Estimates in a Zap?

Create and send professional estimates customized for your business in minutes with InvoiceOwl and win the job.

Frequently Asked Questions
  1. How to collect money from clients?

    You can collect payments from your clients once you send a personalized invoice and schedule them. You can ask for the advance payments before providing the requested solution or receive the payments only if the results are delivered. Send repetitive reminders, emails, calls, or notifications that can increase the chances of collecting payment from clients.

  2. What’s the best way of collecting money?

    The best way is to state your payment conditions upfront by providing your clients professional estimates to help them receive early payments. You can also ask for half or full advance before providing the requested solution to your clients. You should take precautionary measures while handling the financial documents and ensure that you have the proof of these documents for future use.

  3. How to demand a customer payment?

    Small businesses find it hard to deal with late-paying clients and demand the amount which the client owes. You can send the invoice directly to the client’s email address and ditch the traditional methods of demanding offline payments. The contactless, online process can help you process the payment faster and ensure you can get your due amount from your clients.

  4. Can I take legal action for overdue invoices?

    Yes, you have the legal right to take court action against the defaulter. You must consult your legal team and collect the essential financial documents that can serve as proof in the law of court. Once the court finds the defaulter liable for the failed payments, they’ll take strict action against the defaulter, and you can increase the chances of getting your payment.

  5. How does software help you in creating professional invoices and estimates?

    Professional financial management software can streamline the process of creating estimates and invoices as it has pre-built templates you can use to deliver the required financial document to the prospect or the clients. You can check the history of your documents within a few clicks, and it can help you make well-informed future decisions. You can choose from multiple software available in the industry, but you won’t find a better option than InvoiceOwl because of the combination of reasonable price and excellent features.

InvoiceOwl Can Help You Manage Your Finances

InvoiceOwl is the leading contractor estimating and invoicing software that can help you create and manage your estimation, invoicing, purchase orders, payment, and credit memo processing.

You can get centralized control over your financial business operations and reduce the troubles your team might encounter during the document processing. Your account payable team can automate the verification of different financial documents to help you manage your cash flow.

You can create a drastic impact on the audience with professional financial documents that can scale your contractor business. InvoiceOwl allows you to access the history of the financial documents that can minimize the hassles of using the software.

Avail of the FREE trial now and get hands-on experience to transform your handyman service business.

Author Bio
Jeel Patel
Jeel Patel

Jeel Patel is the founder of InvoiceOwl, a top-rated estimating and invoicing software that simplifies the invoicing and estimating processes for contractor businesses. Jeel holds a degree in Business Administration and Management from the University of Toronto, which has provided him with a strong foundation in business principles and practices. With understanding of the challenges faced by contractors, he conducted extensive research and developed a tool to streamline the invoicing and estimating processes for contractors.