How to get customers to pay invoices

Set payment terms before the work starts

Terms the customer agreed to before the job began are the easiest to hold them to. Put the terms in the quote, contract or work order the customer signs, and repeat them on the invoice.

• When payment is due, written as a number of days after the invoice date, such as 15 or 30.
• How they can pay, such as card, bank transfer or check.
• A deposit before work starts for large jobs or new customers, and progress payments for long ones.
• Any late fee or interest, written out as an amount or a yearly rate. Charge only what the customer agreed to in writing (see the Texas rules below).
• Who receives the invoice. In larger companies, the person you work with is often not the person who pays the bills.

Charging interest or late fees in Texas

Texas law caps interest at 10 percent a year unless another law allows more, and a higher rate is usurious (Texas Finance Code, Section 302.001). If you never agreed on interest with the customer, you may still charge 6 percent a year on the amount owed, starting on the 30th day after it was due (Section 302.002).

When the customer is a person paying for personal, family or household services, Texas debt collection law also bars collecting any interest, fee or charge that the agreement doesn't expressly allow or the law doesn't permit (Texas Finance Code, Section 392.303). Interest and fee rules have penalties and exceptions this guide doesn't cover, so have a Texas attorney check your terms before you add a late fee.

Make the invoice easy to pay

An invoice gets paid faster when the customer can pay it from the email or text it arrives in. Send it the day the work is finished, while the job is fresh, and check each of these before it goes out.

• A payment link that opens a page where the customer can pay by card or bank, without logging in.
• The due date written as a date, such as November 14, rather than only “Net 30.”
• An invoice number and a line that names the job, so the customer knows what they're paying for.
• The customer's purchase order number, if they gave you one. Many companies won't pay an invoice without it.
• The right recipient, plus a copy to the customer's billing contact if they have one.

An invoice reminder schedule

Tie every reminder to the due date, so each customer gets the same treatment. Each reminder below repeats the invoice number, the amount and the payment link, and the schedule stops the day the invoice is paid.

1. 1

   Three days before the due date

   A short, friendly note that the invoice is due soon. This one catches invoices that went to spam or the wrong inbox while there's still time to pay on time.

2. 2

   On the due date

   A plain reminder that payment is due today, with the link. Send it in the morning so the customer can pay the same day.

3. 3

   Seven days late

   Say the invoice is past due and ask whether anything is holding it up, such as a question about the work or a missing purchase order number. A question gives the customer an easy way to reply.

4. 4

   Fourteen days late

   Send a text if you have the customer's permission to text them, and call once (see below). Ask for a payment date.

5. 5

   Thirty days late

   Send a final notice in writing. It states the amount, the original due date, a deadline to pay and what you'll do next if it isn't paid. Only name a next step you will take.

Invoice reminder email and text templates

Each template names the invoice, the amount and one way to pay. Replace the parts in brackets with your own details.

Calling about an overdue invoice

A phone call often settles an invoice that emails haven't, because the customer can tell you what's wrong. Call during business hours, give your name and your business's name, and ask one question. If the customer says they'll pay, agree on a date and confirm it in writing the same day.

When the customer disputes the bill or can't pay it all

A customer who disputes part of an invoice may still pay the rest. Ask which line they disagree with, fix it if they're right, and ask them to pay the undisputed amount now while you settle the rest.

If the customer can't pay the full amount, a payment plan in writing beats an invoice that stays unpaid. Write down the amounts and dates, send a payment link for each one, and keep the reminders running for each payment. Before you take more work from a customer with an overdue balance, ask for that balance or a deposit first.

When an invoice is long overdue

Once the final notice deadline passes, choose between writing the invoice off, a collection agency or a court claim. Compare the amount owed with the time each one will take.

1. 1

   Gather the record

   Collect the signed quote or contract, the invoice, every reminder with its date and notes from each call. Every next step depends on these.

2. 2

   File in justice court

   In Texas, small claims cases are heard in justice of the peace courts, for amounts up to $20,000 not counting interest (Texas Government Code, Section 27.031). You usually file in the county and precinct where the customer lives or where the work was to be done. The Texas State Law Library small claims guide explains the filing steps and links to the forms.

3. 3

   Or hand it to an attorney or agency

   For larger or harder cases, an attorney can send a demand letter and sue. Texas law lets you recover reasonable attorney's fees on a claim for services, labor, materials or a contract, if you're represented by an attorney and the customer hasn't paid within 30 days of the claim being presented (Texas Civil Practice and Remedies Code, Chapter 38). A collection agency usually keeps a share of what it collects.

Which debt collection laws apply to you

The federal Fair Debt Collection Practices Act mostly covers collection agencies and others who collect debts owed to someone else. Your own staff collecting your invoices in your business's name are excluded (15 U.S.C. 1692a). You fall under it if you collect your own invoices using a different name that suggests a third party is collecting (FTC). The FTC adds that the FTC Act's ban on unfair or deceptive practices still applies to you either way.

Texas law reaches further. Its debt collection rules cover anyone collecting a consumer debt, which includes a business collecting its own invoices from people who bought for personal, family or household use (Texas Finance Code, Chapter 392). Among other things, you may not threaten arrest, or a criminal charge when no crime was committed, make repeated calls meant to harass, use a name other than your real business name, or add fees the agreement doesn't allow. Threatening a civil lawsuit is allowed. Invoices to other businesses for business purposes are outside both laws, because each one covers only consumer debts.

Sending invoice reminders automatically

Most accounting apps can send reminders for invoices created in them. Those work when every invoice comes out of that one app and a fixed email is enough.

They fall short when invoices go out from more than one place, when you want texts as well as emails, or when you want a reminder to stop the moment a customer replies, disputes the bill or agrees a payment plan. That's the part we build. Reminders follow the schedule you set, include the payment link and stop when the invoice is paid or a person needs to step in.

Reminders sent by text from software need a registered number. US carriers require businesses texting from ordinary 10-digit numbers to register with The Campaign Registry (The Campaign Registry), and the texting provider usually submits it for you. Text only customers who gave you their number, and stop when anyone asks.

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