receivables
Chasing Without Souring the Relationship
A collections sequence that starts friendly and escalates on a schedule recovers more than one that is improvised, and costs less goodwill doing it.
Most small businesses chase late invoices in one of two modes. Nothing happens for weeks, then somebody gets annoyed and sends a message that is sharper than they meant. Or nothing happens at all, and the debt ages until it is awkward to raise.
Both are versions of the same problem: there is no sequence, so every chase is a decision somebody has to make in the moment, and deciding is unpleasant, so it gets deferred.
A written ladder fixes this, and the main thing it fixes is not the customer's behaviour. It is yours.
The ladder
A workable sequence for ordinary commercial and consumer work. The dates are from the due date.
Three days before due: a reminder, not a chase. "This is due on Friday, here is the link." Entirely neutral. A meaningful share of late payment is simply forgetting, and this catches those at zero relational cost.
Day one: a notice. Short, factual, no sentiment. The invoice, the amount, the date it was due, the payment link. No apology for sending it and no annoyance in it.
Day seven: a question. This is the most important rung and the one usually skipped. Instead of repeating the demand, ask whether anything is blocking it. "Is there anything you need from us to get this processed?" This finds the missing purchase order, the query nobody told you about and the invoice that went to the wrong address, which together account for a large share of apparently-late payments.
Day fourteen: a person. A phone call to a named human. Email chases past the second one have a low response rate; calls do not. Keep it short and ask for a date.
Day thirty: a consequence, stated plainly. Whatever your terms actually provide: interest, suspension of further work, or referral. State it as information about what happens next, with a date, not as a threat.
Day forty-five: do the thing you said. The ladder is worth nothing if the last rung never happens, and customers who pay slowly learn quickly which suppliers follow through.
Automate the early rungs, never the late ones
The first two or three are identical every time and should be sent by the system without anybody deciding to send them. That is the entire benefit: the awkward ones become routine because they are not personal.
The later rungs should not be automated. A system that sends a sharp message to a customer who has just lost a family member, or who is mid-dispute over a legitimate problem, has damaged a relationship on your behalf while nobody was looking. From the "question" rung onward, a person should see the account first.
The practical form of this is a stop flag: any account with an open query or a note from the office is excluded from automated sequences until somebody clears it.
Say the amount and the date, every time
Every message should contain the invoice number, the amount, the date it was due, and a way to pay, regardless of how obvious that seems. Chase messages get forwarded internally, read on phones, and acted on by somebody who was not on the earlier thread. A message that says "following up on the below" is useless once it has been forwarded.
What the law says, and who it applies to
The Fair Debt Collection Practices Act at 15 U.S.C. 1692 sets rules on how debts may be collected: what hours contact may be made, what representations may not be made, what happens when a consumer disputes a debt or asks for contact to stop.
The FDCPA applies principally to debt collectors, meaning third parties collecting debts owed to someone else, rather than to a business collecting its own consumer debts. That distinction matters and it is not a licence. Many states have their own statutes that do reach original creditors, and the conduct the FDCPA prohibits is in any case a reasonable floor for how to behave: no contact at unreasonable hours, no misrepresentation of legal status or consequence, no threatening action you do not intend to take.
If you ever hand an account to a collection agency, the agency is unambiguously covered, and their conduct becomes your reputation.
Measure the two numbers that matter
Days sales outstanding, meaning the average time from invoice to payment. The number itself is less interesting than its direction, and it responds to the ladder within a cycle or two.
The share of invoices paid without any chase at all. This is the one that tells you whether the problem is your collections or your invoicing. If half your invoices need chasing, the ladder is treating a symptom, and the cause is upstream in the document, the terms or the payment method.
Both are standard working-capital measures and the SBA's manage your finances material covers the cash-flow context they sit in.
The one rule
Never let an invoice age silently.
Everything above is machinery for that single principle. A customer who hears from you on a schedule knows where they stand and pays, or tells you why not. A customer who hears nothing for six weeks and then receives a final notice has been ambushed, and will remember that longer than they remember the work.