Financial Intelligence
Every day a receivable ages past 60 days, collectibility drops. The operators who recover most of what they're owed follow a structured escalation — not an emotional one.
The highest-ROI collections activity happens before work begins. Contracts, deposits, and clear payment terms eliminate most collection problems entirely.
Require 50% deposit
Eliminates non-payment risk on half of revenue before work starts
Net 15 default terms
Shorter terms reduce average DSO by 8–15 days vs. Net 30
Late fee clause (1.5%/mo)
Creates incentive to pay on time. Must be in contract.
Credit card on file
Same-day collection. Eliminates check and ACH delay.
Send invoice immediately on project completion. Do not wait for end of month.
"Just checking in to confirm you received the invoice." No accusation. No urgency.
Two-day advance reminder. Factual only.
Acknowledge it is past due. Request specific payment date.
Personal contact recovers 60–70% of 31–60 day invoices.
Attach late fee if applicable. Set deadline.
Final before escalation. Last chance to resolve.
Creates paper trail. Often triggers payment immediately.
Agency, small claims, or attorney demand. See below.
Collections agency
When: Balances $500–$10,000. Client is still operating.
Cost: Agency takes 25–40%. You net 60–75%.
Fastest path for moderate balances. No legal cost but you lose 25–40%.
Small claims court
When: Balances under your state limit ($5k–$10k depending on state).
Cost: Filing fee $30–100. No attorney needed.
You represent yourself. High recovery rate. Judgment collectable for years.
Attorney demand letter
When: Balances $2,000+. Client is responsive but avoiding.
Cost: $150–350 for a letter. Often collects payment within 10 days.
Highest response rate. Attorney letterhead signals credibility.
Write off
When: Balance under $500, client has disappeared, or legal cost exceeds recovery.
Cost: Write off as bad debt expense. Tax deductible.
Move on. Your time has economic cost. Document everything before writing off.