The Late Payment Dilemma

If you have a business that involves client payments, you’re likely no stranger to the late payment dilemma. Usually, your client has just genuinely forgotten a payment is due, and when reminded, will get it to you promptly. But in some cases, they haven’t bothered to pay you for services rendered because it’s just not a priority for them. And in those cases, late payments can bring up some less-than-amazing feelings when you’re the person who hasn’t been paid.

Payment conversations can be touchy. We don’t want to be annoying or feel like a nag or imply our client isn’t purposely paying us. Unfortunately, the reality of being a business owner is that we NEED for our clients to pay us, and when they don’t, it can have a waterfall effect on our business.

You wouldn't expect to walk out of Wal-mart with unpaid items, so, why expect it for services rendered?

So what’s the deal with these late payers? Do they just not understand why the invoice should be paid in a prompt manner?

Let’s dig into this a little more.

The obvious (and usually most frustrating) thing that happens when a client doesn’t pay their invoice is that it can mean YOU can’t pay YOUR bills. If you’re a small business, it may have a direct impact on your ability to pay the people who do work for you. Even if you’re a big business, if you have enough clients who aren’t paying at once, your ability to pay others — and even yourself — can be compromised. The dollar and cents may be different between a big and a small business, but the outcome is often the same.

Big or small, all cash flow counts.

Aside from the cashflow issue, unpaid invoices can create, there are also those uncomfortable feelings we start to have about someone making us wait for money owed for services rendered.

Right or wrong, we start to wonder why they don’t respect us. They respected us to employ us, so why are they dragging their heels on payment? We start to think about how if we were their employee, they’d pay us without a second thought. If they didn’t respect us, they’d have never hired us in the first place!

Now, I’m not saying these swirling thoughts are accurate or fair, but they are how many, many people feel when they aren’t getting paid on time.

In order to stop going down the path of: “They don’t respect me!!!” it’s important to take a step back and look at the relationship you have and how things have run up to this point.

First, consider if this is a one-off situation or if this is chronic and ongoing.

If it’s a one-time thing, you should be willing to offer your client a little grace. Yes, you could charge a late fee, but I wouldn’t run right to that if this is a first-time occurrence. It’s always best not to assume negative intent right out of the gate, so a friendly reminder to start is always the most professional approach.

If it’s a situation where your client is often late, then the approach changes.

Look at your past interactions and how the project has gone. Has there been friction? Has the client expressed any dissatisfaction over the work that has been done? What is the pattern of communication? Have you had to remind and nag them every step of the way to get them to take care of their deliverables?

How your client has behaved in the past may be a good indication of why it’s taking so long to get paid. If you’ve seen a pattern of behavior where they are slow to respond or take care of things, the late payment may actually have nothing to do with respecting you or the quality of your work.

If you suspect your client is avoiding paying their invoice because of some sort of dissatisfaction, then it’s time to embrace feeling uncomfortable and have a conversation. Avoiding the problem does nothing but build resentment and keep your business from having the cash flow it needs.

Communication is key to any successful relationship. Like it or not, money conversations are a must.

For me, back in the pre-Internet days, when we didn’t know what people were doing all the time, it was easy to not get as worked up about the little stuff. But now, we can see people out there, living their life on a daily basis, and it can magnify feelings we’re already having.

If you have a client who hasn’t paid you and you’re having trouble paying your bills because of it, seeing them on a jet-set vacation may get us a little hot under the collar. But like anything else on social media, we’re only getting a fraction of the picture, so assuming the worst of them isn’t a great strategy.

So, friends, my best advice when it comes to the late paying clients is this:

And to all my readers who themselves are clients, I offer this gentle reminder: