My Customer Stopped Paying—Now, What?

You’ve been there. Your customer has been paying on time, and suddenly, out of nowhere—crickets. No payment. No response. You check the invoice, and everything looks fine. But now you’re staring at a growing DSO (Days Sales Outstanding) and wondering: How long before I panic?

Before you jump to conclusions and start writing off the debt, let’s break down the warning signs of delinquency and how to respond to each stage without losing your mind.
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1️⃣ Early Warning Signs: “We’ve Hit a Bump”

At the start, it’s easy to dismiss a late payment. Life happens, right? But if you’re dealing with an established customer who’s suddenly slipping on payments, it’s time to take a closer look.

What to do next:

• ‍Send a friendly reminder: Sometimes, payments slip through the cracks. A polite email or phone call is usually all it takes to get things back on track.
• Look for changing payment behavior. Have they moved from ACH to check? These can all-too-often signal issues brewing underneath.‍
• Check for any changes in their business: Look for red flags like a shift in their leadership, restructuring, or business model. These could be signs of internal issues affecting cash flow.
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2️⃣ Stage Two: “Hmm, These Patterns Are Weird”

A couple of late payments in a row? Now you're starting to wonder: Is something bigger going on? This is where your instincts should start kicking in. If you’ve already sent a gentle reminder and haven’t heard anything back, it might be time to move the needle a little.

What to do next:

• ‍Initiate a more direct conversation: Call them up or set a meeting. If they’re still not paying, there’s a chance they’re struggling with cash flow issues.‍
• Ask about their payment cycle: Have they had any unexpected disruptions (like supply chain issues or delayed receivables) that could be affecting their ability to pay you? This info can help you assess the situation.
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3️⃣ Stage Three: “Uh-oh—60 Days and Counting”

Alright, now it’s getting serious. The longer a payment is delayed, the more you risk losing your money entirely. If you're past 60 days and you're still getting the cold shoulder, it's time to take action.

What to do next:

• ‍Send a formal demand letter: A more serious communication that outlines your terms and consequences if the payment isn’t made. This helps set a hard deadline and shows you're serious.‍
• Offer payment options: If they’re in trouble, offering extended payment terms or a payment plan might help you recover some of the funds.‍
• Consider involving a collections agency: As the situation escalates, it might be time to bring in an expert to help you recover the debt.
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4️⃣ Stage Four: “Am I Going to Spam?”

You’ve called. You’ve emailed. You’ve even sent a formal letter, but your customer is still playing hard to get. Now you’re facing the harsh reality: This might be more than a temporary hiccup.

What to do next:

• Review the contract and terms: Double-check what was agreed upon—sometimes the fine print can give you leverage. Were payment terms breached? Do you have the right to terminate or take legal action?
• Consider legal action: If you’ve reached the point where the customer is actively avoiding communication, it might be time to consult with an attorney to understand your options.

This can feel unfair, but it's a tactic often used to ensure that the bankruptcy estate is distributed as equitably as possible. Before you do anything—including spend that money—talk with your counsel.
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5️⃣ Stage Five: “It's Over... Or Is It?”

The worst-case scenario: Your customer goes silent, and they’re nowhere to be found. At this stage, the chances of recovering your money may be slim—but it’s not all over. Bankruptcy could be lurking on the horizon, and knowing what to do next is critical.

What to do next:

• Assess their financial health: If bankruptcy is in the picture, you need to file a proof of claim and secure your position as best as you can (check out our blog on how to deal with a bankruptcy situation).‍
• Write off the debt if necessary: Sometimes, it’s time to accept that you won’t get paid. If you’ve exhausted all options, it may be time to cut your losses and write off the bad debt—but make sure you learn from the experience.
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💸 Bonus Move: Escalate Internally (But Not Where You Think)

When AR isn’t getting traction, don’t just keep hammering AP. Instead, go sideways or up the org chart—reach out to someone in Sales, Procurement, or even the CFO’s office at the customer’s company.

Why it works:

• Sales hates unpaid invoices. It delays their commissions, renewals, or future business.
• Procurement has leverage. If you’re a preferred vendor, they may push AP to get it done.
• Executives don’t want credit holds. Especially if you’re supplying something critical.

What to do next:

• Find your original sales contact or champion—ask them to help nudge AP.
• Use LinkedIn or your CRM to find someone with decision-making power.
• Keep it respectful but clear: “We value the relationship, but we’re at risk of action if this isn’t resolved soon.”
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The Key to Prevention: Stay Proactive

As the saying goes, an ounce of prevention is worth a pound of cure. Instead of waiting until the payment is overdue, be proactive in your approach to credit monitoring. Regularly check in with customers, adjust credit terms as needed, and consider using AI-driven credit risk monitoring tools (like Credit Pulse) to help spot red flags early on.

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Final Thoughts: Keep Calm and Manage Receivables

The good news is that not all delinquencies end in disaster. Many businesses experience late payments, and often it’s just a matter of timing and communication. Sometimes the best course of action is to stay patient and make smart decisions to protect your cash flow.