How do I handle a client who won't pay their invoice?
Most unpaid invoices aren’t malicious. People get busy, lose track, or have their own cash flow problems. That doesn’t make it okay, but it does mean a structured follow-up process resolves the majority of late payments without burning the relationship.
Start with a friendly reminder a few days after the due date. A quick email or text referencing the invoice number and amount is usually enough. If a week passes with no response, follow up again with a phone call. Many business owners skip the call and keep sending emails, but a conversation gets results faster. You can gauge whether the client is dealing with a temporary issue or actively avoiding you.
If two to three weeks go by with no payment and no communication, send a formal written notice. State the amount owed, the original due date, and a deadline for payment. Mention that continued nonpayment may result in further action. Keep the tone professional. You want to get paid, not win an argument.
After 60 days with no progress, you have a few options. A collections agency will pursue the debt for a percentage of what they recover, typically 25% to 50%. For smaller amounts, Arizona small claims court handles disputes up to $3,500 and doesn’t require a lawyer. For larger amounts, consult an attorney about sending a demand letter or filing a civil claim.
The accounting side matters too. Track your receivables by age so you always know what’s 30, 60, and 90 days overdue. An invoicing and payment tracking system gives you visibility into who owes what and how long it’s been outstanding. Without that, overdue invoices slip through the cracks until you realize months later that someone never paid.
If the invoice becomes truly uncollectible, you’ll need to write it off as bad debt. In QuickBooks, this means creating a bad debt expense and applying it against the outstanding invoice. If you’re on accrual basis accounting, you already recorded the revenue when you invoiced, so the write-off reduces your taxable income. On cash basis, you never recorded the income in the first place, so there’s no deduction to take.
Prevention is worth more than any collection effort. Require deposits or progress payments for large projects. Put payment terms in writing before work starts. Offer easy payment methods so there’s no friction. Some businesses add late fees to their terms, which works more as a motivator than a revenue source.
The pattern to watch for is chronic slow payment from the same client. One late invoice is a hiccup. Three late invoices is a pattern telling you this client doesn’t respect your terms. As a QuickBooks ProAdvisor in Chandler, I’ve seen businesses pour energy into chasing payments from problem clients when they’d be better off replacing that revenue with clients who pay on time. Sometimes the best financial decision is letting a bad client go.
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