When should I send an invoice to collections?

After 90 days of no payment or no response to your escalation attempts, collections becomes practical. Before that point, direct phone contact (not just automated reminders) typically resolves the majority of overdue invoices. Collections should be the last resort вЂ” the agency takes 25вЂ“40% of what's collected.

Does requiring payment upfront affect customer experience?

For well-established businesses with strong reputations, requiring a deposit rarely affects close rates. For newer businesses or those in competitive markets, a full-upfront-payment policy can be a barrier. The compromise вЂ” 25вЂ“50% deposit plus automated reminders вЂ” balances cash flow protection with customer experience.

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How to Reduce Overdue Invoices

Three changes produce the most reduction in overdue invoices: invoice immediately after job completion (same day, not end of week), automate payment reminders starting at 7 days overdue, and collect a deposit on jobs over a threshold amount. These three alone typically reduce your average days-outstanding from 30+ to under 15.

The invoicing speed problem: service businesses that invoice weekly or at month-end are giving customers a free credit period they didn't ask for. A customer invoiced 5 days after the job is more likely to have moved on mentally from the expense than one invoiced on the day. Same-day invoicing вЂ” made practical by automated invoicing connected to your job completion workflow вЂ” is the highest-return single change you can make to accounts receivable.

The reminder gap: most service businesses with overdue invoice problems don't send reminders consistently. They either don't send them at all (relying on the customer to remember) or send them inconsistently depending on who has time that day. Automated reminders fill this gap completely вЂ” every overdue invoice gets the same follow-up on the same schedule, regardless of staff workload.

Deposit policy: for larger jobs (the threshold depends on your average job size, but typically jobs over $1,000вЂ“$2,000), a 25вЂ“50% deposit at booking eliminates the downside of non-payment for that portion of the job. Customers who won't pay a deposit are telling you something worth knowing before you do the work.

Common questions

First, check if their payment timing is actually causing you cash flow problems. If a customer always pays at 45 days but consistently pays, and you can manage the timing, they may not need intervention. If you need the cash sooner, move them to a deposit-required policy for future work and have a direct conversation about payment terms.

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