Been wrestling with this for months now. Late payments are killing my cash flow but I’m struggling to quantify the actual financial impact.
How do you properly document these losses? Interest calculations, opportunity costs, the time spent chasing payments - it all adds up but feels impossible to track accurately.
Had this exact problem a few years back. Nearly went under when three big clients all hit 60+ days late at once.
What saved me was tracking it like inventory. I watch how much cash is stuck in overdue invoices each month. When it hits 20% of monthly revenue, I’m in trouble.
I also started tracking when late payments forced me onto credit cards for business expenses. That interest hits hard - way easier to track than some theoretical opportunity cost.
The real wake-up call? Had to pass on a $15K project because I couldn’t front the materials. That client never came back. Now I know exactly what bad payment habits cost.
Just note the days late and move on. Not worth calculating every little cost when you could be working instead.
Late payments wreck everything, but you don’t need fancy math to see the damage.
I track three things:
The real killer isn’t interest or fees. It’s when you can’t take good projects because you’re waiting for someone to pay what they owe you.
I started asking for half upfront on bigger jobs. Solves most problems before they start. Way better than tracking losses after the fact.
I just write down who owes me what and when.
Stop overcomplicating this. Every invoice gets a due date and I track when payment actually arrives. That’s it. The real cost isn’t some complex formula. It’s the phone calls, emails, and missed opportunities while you’re chasing deadbeats. Charge late fees upfront and require deposits. Prevention beats tracking every time.
I keep it simple with a spreadsheet. I track the invoice date, payment date, total amount, and how many days late the payment was.
For the time spent on reminders and calls, I log the hours and apply my hourly rate to get an idea of the lost revenue.
Forget about complex interest calculations. The biggest loss is the time wasted chasing after payments instead of working on new projects.