What to do when a customer will not pay a contractor invoice

What to Do When a Customer Won't Pay

If you're waiting on a customer to pay a contractor invoice that's 60 days overdue, here's how you can tackle it:

1. Start with a Firm Reminder: Send a polite but firm written reminder to the project manager you've been dealing with. Clearly state the invoice number, amount due, and the date it was due. Keep it professional and ask for a confirmation of receipt.

1. Escalate Contacts: If there's no response, escalate the next communication to accounts payable or the finance department. Indicate that you've tried reaching the project manager without success, and attach the original signed-off work documents if possible.

1. Contact the Signer: If accounts payable isn't responsive, go directly to the person who signed off on the work. This could be a manager or owner, depending on the size of the business. Clearly explain the situation and the efforts you've made to resolve it.

1. Offer a Payment Plan: If they claim cash flow issues, be open to negotiating a payment plan that works for both parties. Document any agreement in writing.

1. Legal Considerations: As a last resort, consider sending a formal letter from a legal advisor. This is often enough to prompt action without needing to go to court.

What Most Owners Try First

Many owners start by calling the project manager repeatedly or sending generic email reminders. The problem? These often get ignored or lost among other tasks. The project manager may not have the power to approve payments, or they're simply not passing on the urgency to their finance team.

What to Do Instead

1. Create a Follow-Up Schedule: Decide in advance how often you'll send reminders and when you'll escalate the issue. This might look like a weekly email to the project manager for two weeks, followed by an email to accounts payable and another to the contract signer.

1. Draft Personalized Messages: Each message should be specific to the situation. Here's a template you can use:

- First Reminder: "Hi [Project Manager Name], I hope this finds you well. I'm writing to remind you that Invoice #[12345] is 60 days overdue. We completed the work on [Date], and the payment was due on [Due Date]. Please confirm receipt of this email and let me know when we can expect payment. Thank you."

- Escalation to Accounts Payable: "Hi [Accounts Payable Contact], I've been in touch with [Project Manager Name] regarding Invoice #[12345], which is now overdue by 60 days. The work was completed on [Date], and payment was due on [Due Date]. Could you please look into this and advise on the payment status?"

- Final Escalation to Signer: "Hi [Signer Name], I've reached out to [Project Manager Name] and [Accounts Payable Contact] about Invoice #[12345], overdue by 60 days. We completed the work on [Date], and there seems to be a delay in processing the payment. I'd appreciate your assistance in resolving this."

How This Gets Easier with Scheduled Follow-Ups

Having a schedule means you don't have to remember when to follow up. It ensures nothing slips through the cracks and that you're consistently escalating the issue to the right people. With ARPilot, every message waits for your approval before it goes out, so nothing is sent without your say-so. This ensures that every communication is timely and appropriate, without adding to your workload.

FAQ

What should I do if my emails are being ignored?

Try escalating your communication to someone higher up in the company, like the finance department or the person who signed off on the work.

How often should I follow up on an overdue invoice?

Start with weekly reminders. If there's no response, escalate to a higher authority within the company every two weeks.

Is it better to call or email when chasing an overdue invoice?

Emails provide a written record and are less intrusive, but calls can be more direct. Use both, starting with emails for documentation and following up with calls if needed.

When should I consider legal action for an unpaid invoice?

Legal action is a last resort. Consider it if you've exhausted all other options and the invoice remains unpaid for several months. Consult with a legal advisor before proceeding.

Can ARPilot automate the follow-up process for me?

ARPilot can draft follow-up messages for your approval, ensuring that every communication is timely, appropriate, and escalates correctly up the chain. You maintain control over what gets sent and when.