What to do when a client pays late: a cash flow plan for contractors

Runway · September 2026 · General information, not legal or financial advice

1. Expect it before it happens

Most late payers are late in a predictable way. The same client pays about three weeks late, every time. Plan for that instead of the date on the invoice:

If you don't know a client's habit yet, look at their last few payments. For a new client, plan for the terms plus some extra time until you've seen how they actually pay.

2. Find the week it actually hurts

When a payment slips, move it in your forecast to the new likely date. If you have no date at all, take it out completely. Then look at the weeks in between.

The question isn't "how late is this invoice?" It's "which week does my balance go under, and by how much?" A payment that's two weeks late might cost you nothing, or it might land after payroll. The forecast tells you which.

3. Protect the next few weeks

Once you know the week and the size of the gap, work through your options in roughly this order:

• Protect payroll and anything tax-related first. Those are the payments with the most serious consequences if they're missed.
• Pause spending that can wait, like new equipment or non-urgent purchases.
• Time material orders for upcoming jobs so they don't all land in the gap week.
• Talk to suppliers early. They're often more flexible when you ask before the due date than after it.
• If you already have a line of credit, this is what it's for. Use it for the gap, and plan the week you'll pay it back.
• Treat invoice factoring with care. It gets you cash now in exchange for a fee, and that fee can be expensive.

4. Follow up steadily, not angrily

Calm, regular follow-up keeps the relationship intact and keeps your invoice near the top of their list. A simple rhythm:

• A few days before the due date: a friendly reminder with the invoice attached.
• On the due date: a short note that it's due today.
• One week late: ask directly when the payment will be sent.
• Two to three weeks late: call. Ask for a specific date and amount.
• After 30 days: put it in writing, and check what your contract says about late payment and pausing work.

When the client gives you a date, put that date in your forecast. If they miss it, take the payment out again until you have a new one.

5. Make the next job less exposed

• Ask for a deposit before you start, especially when you'll be buying materials up front.
• Bill in stages tied to milestones, instead of one invoice at the end.
• Use shorter payment terms for new clients until they've paid on time a few times.
• Put late-payment terms in your contract, such as a late fee or interest where it's allowed, and the right to pause work. Rules vary by state, so check before you rely on them.
• For a big job with a new client, find out how they've paid others before you commit.

6. When it's serious

If a client stops responding or disputes the invoice, get advice early. In construction, you may have lien rights that can help you get paid, but the deadlines are strict and the rules vary by state, so talk to a lawyer before they run out. Depending on the amount, other options include a collections agency or small claims court.

7. Keep the forecast honest

• Don't count money until you have a date you believe.
• Update the forecast every Monday.
• Write down each client's real payment habit, and use it.

Related guide: How to forecast cash flow when clients pay 30 to 90 days later · Free 12-month cash flow forecast template

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