Proactive measures to handle overdue invoices

September 28, 2022

Without a doubt, chasing overdue invoices is time-consuming, but that doesn't mean there aren't ways to reduce the likelihood of late payments. Here are a few standard preventative measures to avoid overdue invoices.

Know your customers

Runa credit check on customers to avoid the hassle of dealing with overdue invoices. Consider starting with shorter invoice terms if you have a history of bounced checks or late payments. You can request trade references to learn about their payment history.

Agree on clear payment terms and policies

The contract between your company and its customers should include detailed information on:

●    Payment terms

●    Credit policy

●    Late payment policy

●    Early payment discounts

●    Delayed payment

●    Payment plans

●    Split payment options

To avoid confusion, communicate this in writing and have your customers sign it. This written agreement also serves as proof to show customers when they fail to make payments and will be helpful if the case proceeds to the stage of legal action.

Collect advance payments

Customers should be asked to pay a certain percentage of the total cost before starting the project or product. If you own a small business with limited resources, collecting payments in advance gives you an advantage and saves you the trouble of dealing with late payments.

For example, businesses may request a deposit when an order is placed, followed by a payment percentage at various agreed-upon project milestones.

Send invoices promptly

Receiving payments on time necessitates sending invoices as soon as the service or product is completed. While the customer's order is still fresh in their mind, you have a better chance of getting paid on time. Furthermore, before taking any payment recovery action, double-check that the invoices are sent to the correct recipient with the correct information.

Be flexible with your payment options.

The easier it is for the customers to pay you, the faster you will receive the money. Customers now have more than a few ways to make a successful transaction in this digital age, and most prefer a specific method to make their purchases. By providing multiple payment options, you increase the likelihood that your company will accept their preferred payment method, making it easier for them to make the payment quickly.

Offer early payment discounts.

An early payment discount is when a company offers a small discount to customers who pay before the due date. For example, if a client is given trade credit with terms of 2/10 net 30, this means that if payment is made ten days before the end of the standard credit period of 30 days, the client is given a 2%discount on the total invoice amount. Such discounts may encourage customers to pay on time and, in the long run, build loyalty.


Overdue invoices can wreak havoc on a company's cash flow and ruin customer relationships. You can use Invoice Builder to generate invoices online and send them promptly. However, if you have a streamlined mechanism in place, dealing with them becomes easier. Start with payment reminders and personal contact when following up on overdue invoices. Make your payment terms and other details clear during the onboarding process after running a credit check. The key is to be well-informed and to use the appropriate strategy at the appropriate time.

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