If you’ve ever been told that “the check is in the mail” or you’ve been repeatedly asked to re-send an overdue invoice, you know how frustrating delinquent customers can be. You’re not alone. According to a recent survey by the National Federation of Independent Business, more than 64 percent of small business owners routinely have unpaid invoices 60 days or older.

If you’re stuck dealing with customers who don’t pay their bills, there’s hope. Take these five steps to improve your chances of getting paid promptly.


  1. Once a payment deadline is missed, send an immediate reminder.

Sometimes, a simple reminder letter is enough to get payment. But the longer you wait, the slimmer your odds of ever collecting any money. According to the Commercial Collection Agency Association, your chances of collecting on a delinquent account drop from 81 percent at two months to only 52 percent after six months.


2. Follow up on the phone.

If you don’t get any response from a demand letter, it’s time to get on the phone. Talk to your late customer and find out the reasons why their payment is late.

Simply hearing a voice on the other in the line may be enough to prompt a payment. But if not, be direct with your customer and agree on a specific payment arrangement. Then, drive that agreement home by sending it in writing, including the full amount due and the exact due date.


3. Hire a collection agency or attorney.

If reminders don’t work, you don’t have to give up. You have the option to call on outside help. Collection agencies are your most expensive option, and typically take between 10% and 25% of the invoice value. Although that means giving up a significant portion of your money, it may be better than getting nothing at all.


4. Take them to court.

If your delinquent invoice is under $5,000, you also have the option to pursue a settlement in small claims court. Claims larger than $5,000 usually require an attorney to file suit in civil court. You’ll need to provide documentation regarding the terms and conditions of the invoice, along with any correspondence that shows the debtor admitting to owing you for a past due invoice.

Unfortunately, none of this will be resolved very quickly. Even if you have a signed invoice and proof of delivery, the debtor may still choose to fight back, meaning that the final resolution of your case can take months or possibly years. Assuming you get a judgment, you’ll still have to collect the money owed. In the meantime, you may be liable for any legal fees incurred.


6. Instead, consider accounts receivable factoring.

Accounts receivable factoring (or AR factoring) is a type of business finance that takes the burden of collection off of you and gives you immediate access to the funds tied up in unpaid invoices. Here’s how it works:

The “factor” (another company) agrees to buy receivables from the business for an advance, usually 80 to 90 percent of the value of the invoice. This is cash that the business can use immediately for payroll, inventory, or any other operating costs. Once the invoice is paid, the business receives the remaining 10 to 20 percent, minus the factor’s fee, which is typically only 1.5 to 4 percent. That’s just a fraction of the cost of hiring a collection agency or attorney.


Get paid quickly and easily with AR factoring.

Thousands of business owners have taken control of their finances using AR factoring. You don’t have to open a line of credit, and you don’t have to wait 60 days, 90 days. Instead, you can get immediate access to the cash tied up in your unpaid invoices. Find out how AR factoring can expand your cash flow and speed up the process of getting paid – with no need to chase after delinquent invoices.