How to Collect Payment From Customers

A collection attorney can help collect payments from customers, but may not be your first step.

Timely payment is vital to business success

When a client refuses to pay or pays late, it has a significant impact on your business’s cash flow, and healthy cash flow is one of the most essential elements of any successful business. In fact, a U.S. Bank study found that 82% of failed businesses said that cash flow problems were a factor in the failure of their business.

Getting paid on time is a challenge for just about every business. In fact, one in ten invoices are paid late, according to GlobeNewswire, and companies spend an average of 15 days per year chasing late payments. That is a significant amount of time that could be spent doing something more productive.

Collecting payments from customers can be a balancing act between getting the money you are due and maintaining good customer relationships. Therefore, it’s important to remember that there are many reasons customers may not pay on time: they may have lost the invoice, forgot to pay it, or maybe they don’t have the funds to pay it.

Regardless of the reason, late and non-payments can harm the health of your business. Fortunately, there are steps you can take to ensure that they 1) get paid and 2) get paid on time.

Preventative Measures

Avoiding late or non-payment should always be your first goal. If you have the right systems in place and communicate pertinent payment terms with your customers before starting a project, you’ll save yourself a lot of time down the road.

First, have payment terms in place and make sure your customers understand those terms before starting any project. They should know how much they will be expected to pay, if your quote is an estimate or a final cost, when they are expected to pay both deposits and final payments, how they can pay, and if there are any consequences to late payments, such as late fees.

Depending on the type of project, one way to minimize risk is to require a deposit of 25 to 50% of the total cost of a project (or even full payment) before starting work. Another option is offering a discount for early payment to incentivize customers to pay early or at least on time.

Don’t wait to send invoices. Send invoices as soon as a project is completed.

Make it easy for customers to pay. The more options you offer, the easier it is for them to pay you on time. And with all the technology available today, customers expect those options. Consider accepting credit cards, ACH transfers, checks by phone, or payments through PayPal.

Have a system for tracking payments. Depending on the volume of sales, your system could be as simple as reviewing your receivables once a week and developing a system to follow up on late payments. Or you can use technology to track payments and automatically send alerts when a payment is past due.

If Preventative Measures Don't Work

As we said earlier, there can be several reasons why a customer’s payment is overdue. Start by assuming it’s something innocuous, such as forgetting to make a payment or misplacing an invoice.

As soon as you notice a payment is late, send a polite and professional email, making sure they received the original invoice, letting them know the payment is past due and reminding them how they can pay it. Attach the original invoice to the email. You may choose to send a series of emails – one after three days, then one week, then 15 days, etc. - or go to the next step – a phone call.

When you call your customer remember that maintaining good customer relationships and your business’s reputation is essential, so be polite. Try to speak directly with the customer. Ask what is preventing them from making the payment and try to work out a solution. You may want to try to get a credit card payment over the phone. At the very least, have a next step, such as an agreed-upon date that they will get the payment to you or perhaps a partial payment to start.

If that doesn’t work, try speaking with someone in the billing department. They may have more information about the status of your invoice and any issues delaying the payment.

If that doesn’t work and you haven’t already done so, stop all work for that customer. It could incentivize them to pay you to keep projects moving forward and keep you from losing more of your time and money.

Legal Action

If these steps don’t result in payment, you may have to consider seeking legal action. Sometimes a formal demand letter from an attorney’s office – a certified written letter that threatens legal action if the debt is not paid - is enough to get a customer to pay.

If that doesn’t work, you can consider taking it to small claims court, which is relatively quick and inexpensive. In Pennsylvania, if the amount due is $12,000 or less, you can take your customer to small claims court.

If the amount is above $12,000 and less than $50,000, you can file suit in the Court of Common Pleas and attempt arbitration. Arbitration is overseen by a panel of three local attorneys rather than a judge. It is less formal than court, but the arbitrator’s judgment is enforceable. This approach tends to be relatively quick and inexpensive.

An experienced attorney at Bingaman Hess can help you determine what course of action may be best in your particular situation. Please contact us at 610.374.8377 or find us online.

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Business Succession Planning

By Mahlon Boyer • May 30, 2026

Business succession planning is an important process that helps business owners prepare for the upcoming transfer of ownership and leadership. Whether the transition involves passing the company to family members, selling to business partners or transferring ownership to outside buyers, having a clear succession plan helps reduce uncertainty and protect the long-term security of the business. A careful plan can also minimize disputes, preserve business value and ensure continuity in periods of change. Planning for Business Transfer The first step in business succession planning is identifying how the business will be transferred and who will assume control. Business owners should evaluate their long-term goals, retirement plans, and the financial needs of both the company and their family members. Some owners choose to pass the business on to children or relatives who are already involved in operations. Others may transfer ownership to key employees, business partners or third party buyers. Each option has different legal, operational and financial consequences. A successful transition often takes years of preparation. Potential successors may need leadership training, operational experience and gradual increases in responsibility to ensure they are ready to effectively manage the business. Good communication with family members, partners and stakeholders is also important to avoid misinterpretations and conflict. Business owners should work with legal and financial professionals to create formal succession documents, update corporate records, and establish a realistic timeline for the transfer process. Use of Buy-Sell Agreements Buy-sell agreements are an essential part of many succession plans. These legally binding agreements specify what happens to the interest of a business owner if certain events occur, such as retirement, disability, death or voluntary departure from the company. A buy-sell agreement typically defines who may buy the shares of the departing owner, how the business interest will be valued and the terms of payment. This structure helps maintain stability and prevents ownership disputes that could disrupt operations. For businesses with multiple owners, buy-sell agreements provide understanding and protections for all parties involved. They can prevent unwanted external ownership and ensure that remaining owners retain control of the company. Funding mechanisms are also important. Many businesses use life insurance policies to fund buyouts in the event of an owner's death. This allows surviving owners or family members to complete the transfer without putting financial hardship on the business. Tax Considerations Tax planning is an important part of business succession planning. If the transfer of ownership is not well planned, the business owner and successor will face a substantial tax liability. Depending on how the transfer takes place, the owners may face capital gains, estate, or gift taxes. With good planning, these tax burdens can be reduced with trusts, step-by-step ownership transfers, family partnerships, or changing the type of business entity. Another important factor is valuation. A proper valuation of a business is important for determining tax liability and ensuring that everyone involved in the transfer is treated fairly. Business owners should regularly review their succession plans with accountants, tax advisors, and attorneys, as tax laws are often changing. Regular updates keep the plan in line with changing legislation and the business’s needs. Let Us Help You Navigate the Essentials of Business Succession Planning Don’t wait! Talk to one of the experienced estate planning attorneys at Bingaman Hess today at 610.374.8377 or contact us online. This article is for informational purposes only and does not constitute legal advice. No one may rely on this information without consulting an attorney. Anyone who attempts to use this information without attorney consultation does so at their own risk. Bingaman Hess is not and shall never be responsible for anyone who uses this information. It is not legal advice.