It wasn’t too long ago that I was constantly chasing clients for payment. By day 45 I would have $50-$75k outstanding and it was frustrating. Today, we’re usually less than $5k outstanding at 25 days. It’s made a huge difference. And no, I don’t give discounts for auto pay.

Invoices would be 45 or even 60 days past due. In the beginning I would let it slide because they were “long time” or “good” clients. They didn’t call much for service. Or whatever other excuse I deemed acceptable at the time. And if I’m really being honest with myself I’d have to admit that I was also a little scared at how the conversation might go if I pressed them. Regardless, the delays would continue for weeks at a time until either the client felt like paying or I had enough and threatened suspension. Neither outcome was a “win” in my book. At best, I finally got what I was owed after a dozen phone calls. At worst, the relationship with the client was damaged from the confrontation and threats.

I’d like to say I figured out the solution quickly. In reality it took years of frustration and a good amount of panic before I found a better way. As in all things MSP, setting the proper expectations can make or break your business. I needed to set the expectation with my clients that payment was due by a certain date and that there would be repercussions for not meeting said dates. Automatic payments would be the method to ensure we didn’t miss those dates and didn’t have to spend time chasing invoices. I also needed to stop having different requirements for each client. We all know that standardization is the key to an MSP’s success. I practiced that daily in the selection of my clients, software stack and service delivery. My collections process should be no different.

I kept finding a recurring theme: “oops I forgot”

When I sat down to define my collections process I looked at it through the eyes of a service manager. Whenever there is a support issue that continues to crop up it means we should be addressing it differently. We should be looking not only at what occured, but also what caused it to occur in the first place. And, most importantly, how to prevent it in the future. My collections process was no different. I reviewed previous collection efforts. Thankfully we do everything by ticket so all of the communications were there. Through all the notes I kept finding a recurring theme: “oops I forgot”. So that was issue number one. To reduce the excuse of “I forgot” we were going to ramp up the number of notifications before an invoice became past due. I settled on 3 being the right number of notifications: An email at invoicing, another 5 days before it would be past due, and another on the past due date.

With notifications in order I shifted my focus to past due dates. What would happen if they were late, and when would that happen? As long as I was providing sufficient notifications, I felt that penalties could be swift. This also worked towards the goal of getting my payment as quickly. Instead of the standard NET 30 I decided to enforce NET 15. We invoice on the first by email. That gave the client 15 days to review and render payment. Yes, I know this is a blog about automatic payment. But even with automatic payment you have to account for times where a card gets declined or goes expired. Fifteen days is more than enough time to correct either issue.

Now we’re onto penalties. Before I go any further I have to clarify that I’m not an attorney and this is not legal advice. Check with your own counsel before implementing any of this. In my particular situation I decided to charge a late payment on the 16th of the month. A notification would go out to the client advising of the same and offering to waive the late fee if they made a payment online immediately. Further notifications were sent out after the past due notice in addition to follow up calls.

There are additional steps for 45 days and 60 days which include final termination and forwarding to a collections firm.

At the 30 day mark we would suspend services. This was the tough one. Despite everything I felt bad suspending those “good” and “long time” customers. But I knew if i wanted my company to grow I had to be strong on this point. And let’s be honest. If they’re constantly late then they’re not really a “good client” to begin with. I’m not saying that I didn’t make exceptions. As long as everything was communicated in advance, along with a plan for payment I would make an exception once. I even created a custom field in ConnectWise to document if a billing exception had ever been made. But everyone else was subject to suspension.

There are additional steps for 45 days and 60 days which include final termination and forwarding to a collections firm. But the process in place I wasn’t worried about that coming up often.

we didn’t want our “good” clients to ever get a late fee. So we would begin requiring automatic methods of payment beginning with the next invoice. This would prevent them from ever being late.

The final pieces were requiring automatic payments and communicating that to my clients. New clients wouldn’t be a problem as that would just get built into the MSA. But existing clients were going to be a challenge. The way I decided to present it was based on what benefits they would have. That was actually easier than I thought it would be. I explained that I was spending too much time chasing invoices with “other” clients and it took away from my time to focus on their business. The decision was made to have a strictly defined collections process that everyone would adhere to. This included late fees, reinstatement fees, suspension and termination. But we didn’t want our “good” clients to ever get a late fee. So we would begin requiring automatic methods of payment beginning with the next invoice. This would prevent them from ever being late. Since almost all of our invoices were a fixed amount it shouldn’t be an issue of any surprises. And the invoices that had hardware were already approved in advance anyway. This would be a “win-win” for all involved.

I won’t say that every client was excited at the prospect of putting a card or ACH on file. But most were amenable. Some threatened to cancel. Only one actually did it. Incidentally, that was the client who was past due the most often. So I took that as a win. In the end I’m glad I did it. Our cash flow has been manageable ever since which allows us to more effectively manage the business.


  • Don’t ask for it, require it

  • Have a standardized collection schedule (email me if you would like a copy of ours)

  • Said schedule should include several notifications because things will come up. For example, expired and declined cards

  • Communicate with your client why you are setting this policy. And mostly importantly, why it is in their best interest

  • Be willing to walk away if they can’t meet your standards

Here’s a PDF of our collections process. Collections Workflow