Late payments are one of the most common causes of cash flow stress for small businesses. The fix is not just "ask harder." The fix is a system that makes paying on time the default. When you improve invoicing speed, follow-up cadence, and payment terms, cash moves faster without damaging relationships.

Start with invoice timing. Send invoices immediately when the work is delivered or when a milestone is reached. Every day you wait is a day you push cash out. Many businesses wait a week or more to invoice, then wonder why cash feels slow.

Make invoices easy to pay. Include a one-click payment link, clear bank details, and a simple summary of what the invoice covers. Confusing invoices lead to delays because the customer must ask questions before they can approve payment.

Set clear payment terms before the work starts. If your contract does not clearly state payment terms, you have no leverage later. For new clients, move to shorter terms like Net 7 or Net 14. If Net 30 is required, build it into your pricing or request a deposit.

Use deposits and milestone billing. For project work, ask for a percentage upfront and bill at defined milestones. This aligns cash with delivery and reduces the risk of doing all the work before seeing any money.

Implement a follow-up cadence. Do not wait until an invoice is overdue. Send reminders before due date: 7 days before, 1 day before, and on the due date. After that, follow up at 7, 14, and 30 days past due. Consistent, friendly reminders increase on-time payment without escalation.

Assign a collections owner. If no one owns collections, it will be ignored. Assign one person to review accounts receivable weekly. Their job is to flag late invoices, send reminders, and escalate when needed.

Offer early payment incentives. A small discount for early payment can be cheaper than borrowing money. Example: 2 percent off if paid within 7 days. Use this only if it materially improves cash timing.

Stop work when invoices are late. This is uncomfortable, but it is a powerful lever. Your policy should state that work pauses after a certain number of days past due. When you enforce it consistently, customers learn to pay on time.

Review your customer mix. If a few customers are consistently late, they are draining your cash and your attention. Consider raising prices for those accounts, switching them to prepay, or replacing them with healthier customers.

Track days sales outstanding (DSO). DSO tells you how many days it takes to collect invoices. If DSO creeps up, you will feel it in cash. Track it monthly and set a target reduction.

Use a 13-week cash forecast. The forecast gives you warning when late payments will cause a dip. With visibility, you can accelerate collections or delay expenses before the crunch hits.

Late payments are not just a finance issue; they are a process issue. When you build a simple system around invoicing, reminders, and terms, cash flow becomes predictable. That predictability gives you room to grow without panic.