
Ask HN: How do you deal with clients that don't pay on time - skyisblue
We have a client that never pays their monthly invoice on time and they don&#x27;t want to use our stripe recurring billing.
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JoshTriplett
How high-value is the client, how high-maintenance are they relative to other
clients (apart from late payment), how attached to your service are they, and
how late do they pay (days, weeks, months)?

Before you do anything, consider whether the client represents a sufficiently
large fraction of your business that you can't afford to touch them. If they
do, then focus on getting more clients first.

You might also have a conversation with them about the reasons for the payment
delay. Perhaps they have some "enterprise" weirdness to deal with that you
could simplify if you ask.

The suggestions below assume you've had that conversation, and they don't have
any reason for the late payment that you could help them solve more easily.

If they're high-value and otherwise low-maintenance, they're not paying
ridiculously late, and _especially_ if they don't seem extremely attached to
your service, then consider whether you care enough to change anything.

If they're low-value and high-maintenance, such that you wouldn't mind getting
rid of them anyway, use this as a justified reason to get rid of them if they
don't start paying on time.

If they're high-value but high-maintenance and paying sufficiently late that
it causes you non-trivial problems, you might have a conversation with them
first, and then consider instituting a small fee for late payment, based on
the number of days late. Provide appropriate notice in one month's invoice,
and then start invoicing for the fee. If you want to take an even lighter
touch, forgive the fee for one further month, listing it on the invoice along
with a "first-time late fee waiver". They'll do one of 3-4 things: start
paying the fee, start paying on time, complain at you (in which case you can
talk to them about it at that time), or abandon the service. Don't go down
this road unless you can live with whichever of those they do.

If they're low-value but low-maintenance, the same suggestion above about
instituting a late fee applies, but it'll hurt less if they leave.

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everdev
I ran a web design company for 5 years and having late payment terms in the
contract was essential.

When payment was late I'd typically write something like:

"Thanks again for a fun project, the team really enjoyed working on it. I did
notice that Invoice XXX was due on XX/XX. If you could let me know when it's
in the mail, I'd greatly appreciate it. Thanks again and looking forward to
collaborating again soon."

I felt like it was important to bookend the request for money with two
positive reinforcement statements to keep the tone predominantly friendly.

If still no payment, then I'd send:

"I want to quickly follow up on Invoice XXX. There's a late fee of $XX
scheduled to go out on XX/XX. If you could kindly let me know that payment is
in the mail before this Friday, I'll make sure the late fee gets cancelled."

I felt like this respected their time and drove home the point that this issue
wasn't going to be ignored on my end. I think it also sounded like I was on
their side and wanting to help them which is key because once friendly
discourse breaks down, it becomes infinitely more difficult.

Another clause that was helpful was that ownership transferred when payment
was made. So, in essence they were illegally using our creative work if it
went live and they didn't pay. If the above didn't work, then a reminder of
this usually did the trick.

In the end, if it's more pain than it's worth, just let them go. If they're a
good client, then collection is just an unfortunate necessity in service work
unless you can setup a retainer which is nice, but you'll still have clients
that want work done before their next retainer payment comes in.

If you have more questions, I'm happy to chat. Email and website in my
profile.

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kejaed
Mike Monteiro’s Fuck You, Pay Me is a good watch on this topic.

[https://creativemornings.com/talks/mike-monteiro--
2/1](https://creativemornings.com/talks/mike-monteiro--2/1)

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chrisbennet
Don't punish them for paying late, _reward_ them for paying on time.

$200 hr 30 day net, 25% discount ($150) if paid within 15 business days. [1]

Some companies have a policy of borrowing money they owe, well everyone, for
30 days because it financially benefits them. Change the calculus for them.

[1] And yes I've done almost _exactly_ this. (It was 10 days, not 15.) I was
actually kinda happy when they were late.

~~~
tonyedgecombe
Usually they just take the discount and pay late.

~~~
chrisbennet
Hasn't been my experience but I suppose it depends on your clientele.

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bravenewhellowd
Keep doing everything exactly as you have been. (i.e. shut up and accept the
late payment, each and every month, month in, month out, year after year.)

All the other suggestions in this thread are totally wrong.

if you want, I'll renegotiate with you. Their new payment due date is 30 days
later. Bam. They're now paying early, instead of paying late. All without
talking to them. All on your end. Its just psychology.

It's all in how you look at it.

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afarrell
If in the UK/Europe, you could have them set up a direct debit mandate and
then just take payment 3 days after you send the invoice. The direct debit
guarantee means they could reverse this, but that requires them to take action
to stiff you.

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tedmiston
Do you have a clause in your contract for overdue payments? As a contractor, I
have seen something like net 30 with 1-2% interest charged beyond that. I'm
not sure if there's a norm for this.

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racecar789
Require a deposit up front. Even for a nominal amount. Or, break up the
project into milestones and require payment before working on the next
milestone.

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urahara
A 100% pre-payment for the upcoming month.

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sheraz
time to fire the client?

or move them to a pre-payment method, perhaps?

