What to Do When Someone Doesn’t Pay Their Debt

When a customer who is not paying disrupts your cash flow, it’s more than just frustrating—it affects your business’s stability. Managing unpaid customer bills and overdue invoices can stress operations and relationships.

So, what should you do when someone doesn’t pay their debt?

This guide offers proven debt collection strategies, effective late payment solutions, and tech-savvy approaches—like AI debt collection software—to help you recover overdue payments without stress.

Let’s get started.

12 Tactful Steps to Take When Someone Doesn’t Repay Their Debt

1. Stay Calm and Professional

Before you act, pause and maintain composure. Calm communication sets the tone for resolution.

• Send a polite reminder referencing the overdue invoice number and amount.

• Check for errors, delivery issues, or oversight that could explain delays.

• Keep records of all exchanges to support your debt collection process.

A professional tone helps preserve relationships even when asking for what’s owed.

2. Review Your Terms and Agreements

Next, revisit your initial invoice and contract terms to ensure clarity.

Were your payment terms—due dates, late fees, penalties—clearly stated?
Is the invoice correctly addressed and acknowledged by the customer?

Confirming your documentation ensures you’re ready for the next step in debt recovery with confidence.

3. Send Clear and Polite Follow‑Ups

If the invoice remains unpaid, escalate tactfully but firmly.

• Day 1 past due: Send a friendly nudge—“just a reminder” message.

• Day 5: Issue a formal, professional follow-up restating the due date and amount.

• Day 10: Deliver a firmer message outlining the overdue status and next steps.

These measured reminders set a respectful yet persistent tone for collecting overdue bills from clients.

4. Offer Payment Solutions

If payment isn’t forthcoming, propose practical assistance:

You might offer partial payments, a simple instalment plan, or a short-term flexibility allowance. This late payment solution can help recover payments faster, even if funds are limited, making it easier for your client to manage.

5. Apply Soft Holds or Service Restrictions

When the soft approach doesn’t prompt payment, apply light restrictions:

• Stop accepting new orders until the account is paid

• Temporarily suspend deliverables or services

• Reduce access to premium features on subscription plans

These debt collection strategies apply pressure without jeopardising future engagement.

6. Enforce Consequences Consistently

To reinforce accountability, clearly communicate possible penalties:

• Add late fees or interest based on your terms

• Suspend services until payment or a plan is arranged

• Escalate internally for unresolved debt

Consistent consequences prompt action from unpaid customers and deter repeat delays.

7. Use Automation to Streamline Recovery

Once manual approaches hit their limit, scale intelligently with technology. Best debt collection software and automated debt collection systems can:

• Send scheduled reminders via email, SMS, or voice

• Escalate as invoices age

• Integrate with your CRM and accounting

• Provide real-time dashboards and overdue ageing analysis

Automation means fewer reminders slip through the cracks—and more recover customer payments, faster.

A Relatable Read: AI Debt Collection vs. Traditional Methods: What’s Different?

8. Engage Professional Debt Collection Services

If the debt remains unpaid, it may be time to involve pros.

Professional debt collection services operate on commission, offering structured outreach while preserving your brand reputation. This can be especially effective for larger balances or repeat defaulters.

9. Send a Formal Final Reminder

Before legal or agency escalation, issue a final notice:

• Clearly outline the total recovery of overdue payments needed

• Remind them of your escalation process

• Send certified, if appropriate

A serious tone sets expectations and prepares both parties for the next steps.

10. Track Everything Meticulously

Record every communication, decision, and payment plan. An organised log helps:

• Show escalation patterns

• Support internal or third-party recovery efforts

• Aid in reporting for accounting clarity

11. Escalate or Write Off Strategically

If all else fails:

• Assess debt size vs. potential recovery cost

• Consider small claims court if appropriate

• Write off only after structured escalation fails

Choose the path that balances recovery with cost and relationship preservation.

12. Learn and Refine for Next Time

Post-resolution, analyse your process:

• Identify where payments slowed

• Look for automation opportunities

• Update your follow-up schedule, messaging tone, and escalation timing

A continuous improvement mindset keeps your debt recovery process efficient and effective.

Real-World Example: Let’s See Automation in Action

Situation: A consulting agency has three clients with 60+ day overdue invoices each month.

Before automation:

Emails manually sent and missed

Team overloaded and relationships strained

After adopting AI debt collection software:

Reminders can be sent automatically on Day 1, 0, 5, 10

Escalations are triggered when invoices hit defined thresholds

A unified dashboard for visibility

No manual work beyond setup

The outcomes? Faster payments, less stress, and professional consistency—even with high volumes.

Follow the checklist below to select an ideal debt recovery platform for your needs.

How Can I Choose the Right Collection Software?

When comparing tools, prioritise features that support your needs:

• Automated reminders and escalation workflows

• Easy CRM and accounting integration

• Built-in payment link systems

• User-friendly interface and robust analytics

• Terms customisation for different customer segments

The best debt collection software should fit your process, not require you to change it.

We’ll help you pick your right option. Check out our guide on: 10 Leading AI Debt Collection Software in 2025 You Must Try.

Bringing It All Together

Your recovery workflow should flow like this:

• Friendly pre-due reminder

• Formal follow-ups with tone escalation

• Structured offers of payment assistance

• Service holds when necessary

• Professional escalation with records

• External help or write-off as a last resort

• Use analytics to refine the system

This method keeps unpaid invoices from spiralling out of control and enhances your debt recovery strategy.

Ready to Recover Your Overdue Invoices?

Don’t let unpaid customer debts linger. TLR DebtXpert makes automated collections easy and effective:

Three simple steps:

1. Upload or integrate your unpaid invoices

2. Let our AI system send smart reminders and escalate overdue cases

3. Collect payments faster—all logged in your dashboard

Built for all business sizes, with zero setup cost.

Try TLR DebtXpert free today—start recovering what’s yours effortlessly.

FAQs

1. What are the best options to get out of debt?

Start with structured communication, escalate professionally, offer payment plans, use automated debt collection systems, and involve professionals if needed.

2. How to automate debt collection?

Use AI debt collection software to schedule reminders, monitor due dates, escalate overdue accounts, and integrate with your finance tools automatically.

3. Can I get my money back if someone won’t pay?

Yes. A combination of automated follow-ups, account restrictions, payment offers, professional services, and escalation usually succeeds, even when clients are non-responsive.

4. How can I recover money from a customer?

Document the debt, send timely reminders, offer plans, restrict services after deadlines, escalate professionally, and use automation or third-party services for persistent cases.