Initiate Direct Contact
The first step when a client misses a payment deadline is initiating direct contact without delay and asking the client to pay up. The probability of collecting a bad debt drops with every passing month following the due date.
While sending a late payment reminder letter including a copy of the invoice by recorded delivery post is an essential legal requirement if the matter eventually reaches the court, the best practice is to send the letter as a formality and talk to the client over phone or in person.
Clients operating in good faith use the conversation to discuss their inability to pay and negotiate a revised arrangement. Companies would do well to extend the payment deadline or revise the payment schedule on a strictly one off basis, and for genuine reasons faced by the client. Offering a discount for quick payment works both ways. It may prompt the client to make this payment first, over payments due to other creditors but it can also tempt the debtor to bargain for more, or try the same tactic always.
The most important consideration is to make the client commit to a definite date or revised payment schedule, and do not end the conversation with the client remaining evasive or non-committed on a definite date of payment. Make the client sign a document summarizing the revised arrangement.
Many clients require persisting calling up or meetings before they release payment. An important consideration is not to be rude or abusive to the client, while remaining assertive and indulging in tough talking. People who withhold legitimate payments remain on the lookout for any excuse not to pay up, and an aggressive demand outside the purview of the law or accepted conventions is one excuse for the client to flare up.