Late payments are a big deal for any business owner. Here’s how to lock down deadlines and fight for what you’ve earned.

As a business owner, a big stressor can be payment timing. Not only do you have to juggle structural deadlines, problems that arise, and many other aspects of the home building process, but you also have to make sure you’re managing your income and expenses effectively. Proper cash flow is dependent on regular, on-time payments.

For any small business, a late payment from a client is a major concern. In the beginning, it’s easy to assume that other businesses are functioning on deadlines and that because agreements are in place, there should be no issues with on-time payments. Right?

Sadly, no. Almost every small home building business has likely faced the issue of a client not paying on time. says that the average turnaround for payment in the construction industry is 50 to 75 days from the date of invoice, which indicates just how long clients can take.

How can you avoid late payments from happening in the first place? Here are four tips to help you ensure you’ll get payments from clients on time.

1. Set up strict timelines in agreements

This is another aspect of a business that you may think is a no-brainer. But many small business owners in the building realm may include language like “due upon receipt of invoice” in their agreement’s payment terms.

While that may sound like ASAP to you, without a specific due date or timeline in your agreement, clients may try to take advantage of that somewhat vague language. Try instead inserting “due within 30 days of receipt” or whatever your timeline may be.

You could also outline lump-sum payments due at different intervals throughout the project, i.e. one-third up front, one-third mid-project, and one-third when finished.

Being specific will only help everyone involved stay on the same page.

2.  State that without payment, you won’t work

If you set up a timeline of several payments throughout the project, when you don’t receive the first one on time, stipulate your right to stop work under your agreement with the client.

It almost goes without saying – they’ll most likely get that payment in, so the project can continue. This is an effective way to protect yourself in the initial contract.

3.  Send a reminder approaching a deadline

Another good idea to keep tabs on timelines with clients is to send a reminder mid-month or when a payment is nearing its due date. This gives the client the benefit of the doubt (that a late payment would be forgetfulness and not purposeful) and shows them that you are paying close attention to dates and deadlines.

4.  Follow up immediately and remain professional

If the payment does end up being late, never be afraid to reach out to a client immediately. Sometimes small business owners feel that doing so right away can come off as pushy, but staying silent will only delay things further. You have a right to receive payment on time, and following up right away shows your client that you aren’t going to put up with late payments.

Of course, there will be times when you may get worked up about not receiving on-time payment. And not getting paid is a big deal, so you’re right to feel that way.

But start the correspondence politely and professionally. Be understanding if the client is facing some a hardship. Even if your invoice slipped through the cracks somehow, try not to get angry if this is the first time it’s happened. We all make mistakes, and you will want to stay on good terms with your clients.

Showing a client that you are understanding about a late payment is a good idea the first time it happens. That being said, if it happens again or continues, then it needs to be addressed directly and perhaps more sternly.

However, if you have already used the other strategies outlined in this article, and your client is still paying you late, and you’ve already been understanding for one go around, it could be time to get a legal professional involved.

Not getting paid is major. Don’t let clients make you feel like you’re being pushy or overly cautious about it. Remember to be specific and firm in your agreements, stop work if a payment is late, send reminders and follow-ups.

Here at No Boundaries Advisors, we help home builders and developers create a successful business plan. We offer advisory and accounting services, as well as tax and strategic planning services. Get in touch today to learn more about what we can offer you and your business.

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