Chasing money is awkward. But you are a business, not a charity. Having a systematic escalation process removes the emotion from debt collection and protects your professional relationships.
Step 1: The "Did You See This?" (Day 1 Overdue)
A polite nudge. Assume it was a mistake. Most late payments are genuinely accidental—the client forgot, the email went to spam, or the accounts payable person was on vacation.
Step 2: The "Work Paused" (Day 7 Overdue)
"To avoid further delays, please settle this invoice so we can continue to Phase 2." This introduces a consequence—their project is now delayed because of their inaction.
Step 3: The "Late Fee" (Day 15 Overdue)
Re-send the invoice with the late fee added (as per your original contract terms). A standard late fee is 1.5% per month (18% APR). The fee itself isn't the point—it's the signal that you're serious.
Step 4: The "Final Notice" (Day 30 Overdue)
"If payment is not received by [Date], we will refer this matter to a collections agency." At this point, the relationship is already damaged. Your goal is recovery, not reconciliation.