Collecting payment can be at odds with your business’s more creative or service-based parts. But whether you’re a solo entrepreneur, a small agency, or a bigger enterprise, ensuring you’re paid punctually is part of running a stable, healthy operation. It’s also about mutual respect: you deliver your product or service, and your client completes their side of the agreement by submitting payment.

Securing overdue funds also drains time and resources. European businesses, for example, spend 29% of the working year chasing overdue balances. But with some planning, you can design a payment process that effortlessly guides your client from the completed project to the final invoice. In this guide, we’ll cover how to set up an effective system for collecting funds, handling late transactions, avoiding common mistakes, and more.

What’s in this article?

• Steps to collect payment from a client
  
• What details should you include in an invoice?
  
• How should you handle late payments?
  
• Common mistakes in collecting payments
  
• How can Stripe help collect payment from clients?
  

Steps to collect payment from a client

Once you have a method in place, you can follow the same routine to collect payments from every buyer. Below is a straightforward sequence you can adapt to fit your needs:

Agree on terms at the start

Discuss compensation as soon as you begin working with a new client. This could be part of your proposal or statement of work. Make explicit the deadlines, payment methods you accept, partial deposits (if any), and other due dates.

Track your work

If you sell products, keep consistent records of what you sell, how much, and when. If you provide services, track your hours, tasks completed, and expenses incurred. Good records help you bill accurately.

Invoice promptly

Once you wrap up the project or deliver the product, issue your charge immediately. Keeping up with your invoices sets you up for more on-time payments, and billing delays can hurt your momentum.

Make it easy to pay

Some clients prefer credit cards, while others might want to use bank transfers or digital wallets. Offering convenient options can speed up the process. A unified payment solution such as Stripe makes this straightforward.

Follow up if needed

Overdue balances are often the result of simple forgetfulness, and a friendly reminder might be enough for a client to send payment.

Record the payment

Once payment arrives, mark it in your system, whether accounting software or a simple spreadsheet. Updating your records gives you an accurate revenue view and prevents unnecessary follow-ups.

What details should you include in an invoice?

Issuing an invoice with all the correct details saves you and your client time and can get you paid faster. Here’s what to include in an effective statement:

Invoice number and date

A unique invoice number helps both parties keep track of each transaction. Also, include the date you’re sending it (or when the work was completed, depending on your accounting approach).

Your business information

Include your company’s name (or your name if you’re a sole proprietor), address, email, and phone number if relevant. This establishes legitimacy and allows clients to contact you if they have questions.

Client’s details

Add the name, address, and other relevant information for your invoicing business or individual.

Description of goods or services

Clarity is important here: itemise the products sold or tasks performed. Use concise language that reflects what was mutually accepted in your initial agreement or quote.

Quantity, rates, and total due

If you charge by the hour, list your hours and hourly rate. Include the agreed-upon total if it’s a fixed amount for a discrete job. For physical products, show the price per item and total units. This helps the client see exactly how you arrived at the final amount owed. Denote any taxes you’re charging on the total.

Payment terms and due date

When is the payment expected? Are the terms net 15, net 30, or due upon receipt? Be direct to avoid confusion.

Payment instructions

A short reminder on how to pay can make a difference. Consider including a note such as, “Please pay via credit card using the link below” or “Payment can be made by bank transfer to the account listed”.

Thank-you or next steps

End with a friendly note and a brief word of thanks. If you’re open to future work, mention that, but keep it simple.

How should you handle late payments?

Late payments aren’t necessarily a sign of trouble with your client. An invoice can get lost, or a busy staff member might forget to forward it for approval. Here are some steps you can take when compensation doesn’t arrive as expected:

Send payment reminders

Start with a short email after a missed deadline with a polite but direct tone. Include the invoice number, the original due date, and a link or instructions for payment, and avoid sounding confrontational. For example:

“Hi [Client name],

Hope all is well. Just sending a friendly reminder that invoice no.[Number], dated [Date], is now overdue. Please let me know if you have any questions or concerns. We value our partnership and want to make sure everything is running smoothly on your end.”

If a gentle reminder doesn’t work, you can follow up with another message or phone call referencing your previous message. If they continue to ignore your attempts to reach them, you may need to reference the agreed-upon contract or explore more formal collection methods as a last resort.

Consider charging late fees

Adding fees for overdue invoices can encourage prompt payment. Make sure your contract outlines any penalties upfront before charging them since surprising clients after they’re already late can damage your relationship. If you plan to charge interest, be transparent about the rate and other conditions.

Offer instalment plans

Your client might request an instalment plan if they’re experiencing financial difficulties. Agree on a repayment schedule that suits you both. It’s often better to bring some consistent money in than wait indefinitely for a lump sum that might not arrive.

Common mistakes in collecting payments

Errors happen in every industry. A few consistent mis-steps are common, but staying aware can help you avoid them. These are some of the most common mistakes made in payment collection:

Vague terms and expectations

Skipping the discussion about fees and payment schedules at the beginning of your work with a client often leads to misunderstandings. When you reach the invoicing stage, the client might claim they didn’t realise the final bill would be that high or assumed they had 60 days to pay rather than 30. A quick conversation early on and a basic contract prevents miscommunications.

Delayed or inconsistent invoicing

Waiting too long to bill can make revenue shaky. It also confuses clients, who might wonder when they’ll have to pay. Sending invoices whenever you remember makes you look disorganised. Having a set schedule – such as sending bills on Fridays or right after hitting a project milestone – sets expectations for promptness on both sides.

Overcomplicated billing instructions

If your invoice is difficult to read or the ways to send funds are unclear, the client might set it aside. Excessive obstacles – such as printing and completing a form – create unnecessary delays. Instead, allow them to pay online through a link in the invoice or provide a quick set of instructions for the payment methods you accept.

Lack of follow-up

It’s tempting to avoid the awkwardness of chasing money, but ignoring overdue bills won’t do you any favours. A gentle but consistent follow-up strategy is part of taking care of your business.

No backup plan for late or missed payments

Occasionally, you’ll encounter a client who struggles with prompt payment. It’s helpful to decide in advance how you’ll handle these situations. Will you offer an instalment plan or require partial payment before starting new work? Having a strategy can spare you from responding reactively and protect the relationship.

How can Stripe help collect payment from clients?

Stripe’s online tools simplify invoicing to get you paid faster. Below are some ways Stripe can introduce new workflows to create a better payment collection experience:

Checkout and payment links

Integrate Stripe Checkout with your website or app for a secure, ready-made page that supports numerous payment methods worldwide. Instead of manually collecting card details, you can direct your clients to this page, which handles the rest, from card validations to receipts. Stripe Payment Links allows you to generate a short link you can drop into an email or text message. When clients click it, they land on a dedicated payment page that shows them exactly how to pay.

Invoicing tools

Stripe Invoicing manages the entire process, from creating an invoice and sending it electronically to following up on overdue bills. You can customise invoices with your branding and set your payment terms. The system can also automatically deliver reminders to pay if the due date passes, which means fewer manual tasks for you.

Subscription management

If your business charges monthly services or retainers, Stripe Billing has subscription management baked in. You can set up a recurring charge, define how often customers need to be billed, and handle proration if customers change plans halfway through a cycle.