Been freelancing for years and still struggle with this one. I know late payments hurt my cash flow, but I’ve never figured out a good system to actually measure the real impact on my business.
Currently just keeping mental notes when clients pay late, but that’s not giving me the full picture. Need to get better at tracking this stuff properly.
I track two things that make a huge difference:
I just use a notebook - write down when invoices should be paid and when they actually come in. End of each month, I can see exactly what I planned versus what’s actually in my account.
The real eye opener? Calculating average payment delay. Some clients consistently pay 10-15 days late - basically I’m giving them free loans.
Once I saw the actual numbers, I got way more aggressive about following up on overdue invoices. Mental notes don’t work when you realize late payments are costing you hundreds or thousands monthly.
I write down names of clients who pay late.
I keep a spreadsheet to track due dates and payments. Each month, I check how much revenue came in late. This helps me see what cash flow I am missing and which clients are impacting my income the most.
I run a monthly aging report. I list unpaid invoices by days overdue. Then I calculate what percentage of my monthly revenue is tied up in late payments. If it hits 20% or more, it’s time to start making calls or change payment terms. Track the dollar amount that’s unpaid, not just how many invoices are late.
This shows you exactly which clients are costing you money and when to get tough about collections.
Just check your bank balance monthly against what you expected. If it’s lower, that’s your impact right there.
Tracking late payments isn’t just about knowing who’s slow - it’s about seeing what it actually costs your business. I learned this the hard way.
The game-changer for me was calculating my “cash flow gap.” I look at my monthly expenses and see how much gets covered by on-time payments vs. late ones. When I realized late payments were forcing me to put basic business expenses on my credit card, I got serious about tracking.
I also track “opportunity cost” - money I could’ve invested back into the business if I’d had it on time. Last year, I missed a bulk discount on supplies because a big client paid 30 days late.
Here’s my simple method: At month end, I add up all the money that should’ve come in but didn’t. Then I calculate what that money would’ve earned in my savings account, or what late fees I paid because I didn’t have cash flow.
Once you see the actual dollar impact, you’ll treat late payments like the real business problem they are.