Chasing money is unpaid labour. The best invoice is the one that gets paid before anyone has to think about it.
TL;DR Card on file and auto-pay solve most of it. Shorten terms, invoice the same day, make paying a single tap, and run a fixed follow-up sequence rather than deciding each time.
Fix the causes, in order
Most late payment is friction, not refusal.
| Cause | Fix |
|---|---|
| Invoice sent days later | Invoice same day, from the van |
| Paying requires effort | One-tap payment link |
| Wrong contact | Confirm who pays at booking |
| Buried in email | Send by text as well |
| No deadline felt | Shorter terms, stated clearly |
| Nothing happens if late | Consistent follow-up |
Same-day invoicing is the single biggest lever and it costs nothing. An invoice sent while the work is fresh gets paid far faster than one that arrives next week when the memory has faded.
Auto-pay is the real answer
Everything else is managing a problem that card on file removes.
- Take the card at booking, stored with your processor.
- Charge on completion, with notice.
- Receipt immediately.
For recurring work, auto-pay is straightforward and expected. For one-off jobs, card on file plus charge-on-completion achieves the same result.
Never store card details yourself. Use tokenised vaulting through your payment provider.
Terms, and shortening them
Net 30 is a convention, not a law. For residential and small commercial work it is usually unnecessary.
| Terms | Use for |
|---|---|
| Due on completion | Residential, most standard work |
| Net 7 | Small commercial |
| Net 14 | Commercial, established relationship |
| Net 30 | Larger commercial, where required |
Just changing your default from Net 30 to due on completion shortens your cash cycle by weeks and most residential customers do not blink.
State terms on the quote, not just the invoice. Learning your payment terms at invoice time feels like a change.
Early payment discounts, assessed honestly
The classic is 2/10 Net 30: 2% off if paid within 10 days.
The arithmetic. Paying 2% to get money 20 days early is an annualised cost in the region of 36%. That is expensive money.
When it makes sense. If your alternative is genuinely a credit line at a high rate, or if late payment is costing you more than 2% in chasing time and risk.
When it does not. If customers already pay reasonably promptly. You are discounting behaviour you already had.
Usually better: shorten terms and take card on file, rather than pay 2% for the same outcome.
Late fees, used properly
Legality varies by jurisdiction. Many places cap the rate, require the term to be disclosed in advance, and treat undisclosed fees as unenforceable. Check your local rules before setting one.
If you use them
- Disclose on the quote and the invoice, with the rate stated.
- A modest monthly rate on the overdue balance, within legal limits.
- Apply consistently. A fee you waive on request is not a fee.
- Waive deliberately for good customers as a gesture, not under pressure.
Honestly, late fees rarely change behaviour on small invoices. The follow-up sequence does more.
Payment methods, and their real costs
| Method | Cost to you | Speed |
|---|---|---|
| ACH / bank transfer | Low flat fee | 1 to 3 days |
| Card | Percentage | Instant |
| Cash or cheque | Free, but slow and manual | Days to weeks |
| Digital wallets | Similar to card | Instant |
Offer both ACH and card. ACH is much cheaper on large invoices, card is faster and easier on small ones. For a $12,000 invoice the fee difference is significant enough to nudge customers toward ACH.
A cash discount for bank transfer is generally safer than a card surcharge, which is restricted in several states and by card network rules.
The follow-up sequence
Fixed, automated, not a decision you make each time.
| Day | Action |
|---|---|
| 0 | Invoice sent by email and text, same day |
| 3 | Friendly automated reminder |
| 7 | Second reminder, payment link repeated |
| 14 | Personal text from you |
| 21 | Phone call |
| 30 | Formal notice, late fee applied if disclosed |
| 45 | Final notice before escalation |
Most invoices resolve at the day 14 text. A short personal message from a named human works far better than a third automated reminder.
Hi Michelle, just circling on the invoice from the 12th, $640. Here is the link if it is easier: [link]. Any problem with it, tell me and we will sort it. – Dave
Ask whether something is wrong. Sometimes there is a genuine issue nobody raised, and you would rather know at day 14 than day 60.
Measure it
- Days sales outstanding.
- Percentage paid on time.
- Percentage on auto-pay. This is the number to grow.
- Hours spent chasing, which is the real cost.
Move your default terms to due on completion and start invoicing from the van before you drive away. Those two changes cost nothing and shorten most service businesses’ cash cycle by weeks.
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