My Customer Stopped Paying. Now What?

You’ve been there. A customer who always pays on time suddenly goes quiet. No payment. No response. You double-check the invoice and everything looks fine, but your DSO (Days Sales Outstanding) keeps climbing.

The real question is: when do you stop waiting and start worrying?

Late payments are one of the most common pain points in B2B credit. In fact, studies show that more than 50% of B2B invoices are paid late, with some industries averaging 60+ days overdue. Left unmanaged, late payments eat into profit margins, strain cash flow, and put your business at risk.

This playbook breaks down the warning signs of delinquency, what to do at each stage, and how to prevent overdue invoices with smarter credit management.

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Stage One: Early Warning Signs

A single late payment can feel harmless. Customers get busy, accounting teams overlook deadlines, and things slip through the cracks. But with established accounts, even one slip should prompt a closer look.

What to watch for:

• Payments shifting from ACH to checks (often a liquidity tactic)
• A missed payment with no communication
• Leadership turnover, restructuring, or new ownership

Pro Tip: Keep a dashboard of customer payment behavior. Small shifts in method or timing often show up before delinquency does.

What to do:
Send a friendly reminder. A polite nudge by email or phone is usually enough to get things back on track. Use this moment to confirm whether there have been changes in their process. Even if it’s resolved, you now have a record to track future trends.

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Stage Two: Patterns Start to Shift

Two or more late payments in a row rarely happen by accident. This is where instinct should kick in. Patterns often mean something bigger is going on beneath the surface.

Fact: Customers in financial stress often “pay slow” across multiple vendors, spreading out who feels the pain. If you’re seeing delays, chances are others are too.

What to do:
Move beyond reminders. Pick up the phone or schedule a meeting. Ask about their payment cycle, whether they’re experiencing delayed receivables, or if supply chain disruptions are slowing them down.

Pro Tip: Ask open-ended questions like, “Is there anything holding up payments on your side?” You’ll learn more than if you simply ask, “When will you pay?”

By documenting these conversations, you create a clear timeline of events that supports escalation if needed.

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Stage Three: 60 Days Overdue

Once an account crosses 60 days, risk rises sharply. At this point, it’s not just a late invoice. It’s a delinquent account.

Did you know? The likelihood of recovering payment drops dramatically after 60 days. By 90 days, recovery rates can fall below 50%.

What to do:

• Send a formal demand letter. Written documentation shows seriousness and sets a hard deadline.
• Offer payment options. Installment plans may not be ideal, but partial recovery is better than none.
• Evaluate whether to involve a collections partner if silence continues.

Pro Tip: Never offer new credit while an account is overdue. Extending terms while chasing old balances just compounds the risk.

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Stage Four: Silence from the Customer

When communication stops, the risk of non-payment spikes. Silence is often intentional and serves as a strategy to buy time or avoid confrontation.

What to do:
Review your contract carefully. Were payment terms breached? Do you have rights to suspend service or terminate agreements? At this stage, consult legal counsel to explore enforcement options.

Pro Tip: Use contract reviews as a teaching moment. If you discover weak payment clauses, strengthen them for future customers. Strong contracts are your best shield when things go wrong.

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Stage Five: The Breaking Point

If your customer disappears completely, the chances of full recovery are slim. This may be a case of bad debt or a sign that bankruptcy is on the horizon.

What to do:
Assess their financial health using all available data. If bankruptcy is filed, move quickly to file a proof of claim. If recovery looks impossible, it may be time to write off the debt and focus on prevention going forward.

Pro Tip: A bad debt write-off isn’t just a loss, but also it’s a dataset. Use what you learned to adjust your credit policies and monitoring rules so the same scenario doesn’t repeat.

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Bonus Strategy: Escalate Internally

When Accounts Payable ignores you, go around them. Escalating inside your customer’s organization can unlock faster resolution.

• Sales teams care about commissions and renewals. Unpaid invoices delay both.
• Procurement teams want to protect vendor relationships. They have leverage with AP.
• Executives don’t want mission-critical vendors on hold.

What to do:
Reach out respectfully to your original sales contact or use LinkedIn to connect with decision makers. Frame it around partnership: “We value our relationship, but unresolved invoices put us at risk of action. Can you help us resolve this quickly?”

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Prevention: The Smarter Play

The best way to handle delinquency is to stop it before it starts. That requires proactive monitoring, stronger credit applications, and AI-powered insights.

• Regularly review customer payment behavior
• Adjust credit terms based on risk signals
• Leverage fraud-resistant digital applications and real-time monitoring from Credit Pulse to catch red flags early

Fact: Companies that monitor customer risk continuously can reduce bad debt by up to 30% and lower DSO across their portfolio. Prevention is is safer and more profitable.

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Final Thoughts: Stay Calm, Stay Strategic

Late payments happen to every credit team, but not every late payment needs to become a write-off. The key is recognizing the stages of delinquency, acting decisively at each step, and preventing problems with proactive credit management.

With fraud-resistant credit applications and AI-driven monitoring from Credit Pulse, you can reduce risk, shorten DSO, and protect cash flow while maintaining strong customer relationships.

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FAQ: Late Payments in B2B

When should I start worrying about a late payment?
One missed invoice can be a slip. Multiple late payments or silence from the customer are stronger red flags.

What is the biggest risk of overdue invoices?
Cash flow stress, rising DSO, and eventual write-offs if the delinquency becomes permanent.

How can I prevent late payments?
Monitor accounts proactively, adjust credit limits, and use AI-powered tools like Credit Pulse to identify early warning signs.

What should I do at 60+ days overdue?
Send a formal demand letter, offer payment options, and consider collections support if there’s no response.