How do you avoid chasing final invoices?

roarrory33

I’m starting to notice a pattern with a few project-based clients and wondered how other small businesses handle it professionally.

The work itself gets reviewed and approved quickly, communication is great throughout the project, but once the final invoice is sent things suddenly slow down. Replies become vague, finance “needs to process it”, or communication drops off for weeks.

I appreciate late payment of commercial debts is unfortunately part of running a business sometimes, but I’m trying to improve the process rather than constantly chase manually.

For those running service businesses:

• have milestone payments or deposits helped?
• do clearer payment terms actually make much difference in practice?
• or is this mostly about screening clients better upfront?

Interested in practical approaches that reduce friction rather than escalate it.

golfplayer224

Deposits and milestone billing helped us more than stricter wording ever did. Once there’s a regular payment rhythm during the project, the final invoice tends to become much less of a “decision point” for the client.

We also got better at spotting warning signs early — long approval chains, vague procurement processes, constantly changing contacts, etc. Those clients aren’t always bad payers, but they often create the slowest admin later.

mlz1413

Milestone payments is definitely something to do imo.

We always used to to 50% deposit and 50% on completion, but that left us exposed to a lot when there was no leverage.

We now do 50% deposit to book a production date, 25% to start production and 25% on completion.

Also if we give any discount it is strictly on 7 day payment terms. So like a settlement discount, hence invoice is for full amount of there is any dispute.

If you are doing a project, you might to 10% or 20% payments throughout, but if you notice any issues with payment you need to be strong and not continue working. Which is hard if you only do one project at once.

My partner is a builder and he has literally cleared all tools and materials off a site half way through because payments started to be delayed. You really get to know who who are working for then.

Always get bespoke materials paid for when you need to pay for them. Or make the customer deal directly with suppliers of bespoke goods.

Also as you start the final stage have a chat and ensure you know who in the accounts department is dealing with your invoices and the direct email address. The site managers are often off to the next job and don't have the same involvement for the job just finished.

MyRealNameToo

Milestone/Deposits really depends on what you are doing and your average engagement length… our engagements average at about 18 months so we bill monthly; if you were doing a 2 week engagement then with 28 day payment terms then splitting it is really going to materially help.

It also depends on the size of your clients, big companies can be more painful to deal with because it has to go through Accounts Payable who'll ensure the invoice is correct to pay, which may result in several referrals if there is no PO system whilst they firstly try and work out who needs to authorise the payment and then go through multiple layers of approval depending on the value.

If they dont have a TMS then it can then be a second set of pain once the invoice is approved to actually raise the payment. My last client had over 200 bank accounts, senior management approval was required on relatively modest sums and required the manager to have the correct bank card with them depending on which bank the payment was to be made from.

I disagree that the company was intentionally slow at paying just it isnt anyone's priority and bigger invoices require a lot of approvals twice (once to raise the payment, one to authorise the payment). With a software vendor only 3 people had the authority to sign off the payment of that size, it came in during summer when 2 were on holiday and the third was travelling and hadn't brought all 200 bank cards with them.