The Past Due Collections SOP

Purpose

A standard operating procedure (SOP) is the written, repeatable process everyone follows the same way, so collections do not depend on whether someone remembered to chase an invoice. Past-due collections is the fixed cadence that turns an unpaid invoice into cash without burning the relationship or letting the debt age until it is uncollectible. Cash is the oxygen of a shop; work you did but never got paid for is a loan you did not agree to make. This SOP defines the reminder sequence, the escalation, and when to stop, so every aging invoice is worked the same way.

Scope

Applies to any invoice past its due date. Covers confirming the debt, the reminder cadence, escalation, and the endgame. It does not cover invoices the customer is actively disputing over the work itself; route those to complaint or warranty handling and pause the collections clock until the dispute is resolved. The point is to chase money owed, not to argue about work.

Roles and responsibilities

Procedure

1. Confirm the invoice is actually past due and correct

Before you chase, verify the invoice is right and truly unpaid: correct amount, correct terms, no payment sitting unapplied. Chasing a customer who already paid, or over a billing error, costs you the relationship and your credibility. Fix the record first.

2. Send the first reminder promptly and politely

The day an invoice goes past due, send a friendly reminder. Most late payment is an oversight, not a refusal. A prompt, polite nudge with the invoice attached clears the majority of balances before they ever become a real collections problem.

3. Follow a fixed reminder cadence

Do not chase by mood. Set a standard sequence, spaced reminders at defined intervals, and work every past-due invoice through it the same way. A written cadence is what keeps the quiet accounts from slipping through while the squeaky ones get all the attention.

4. Escalate the tone and the channel on schedule

As the balance ages, the message firms up and the channel changes: a gentle email becomes a direct phone call becomes a formal notice. Each step is clear about the amount, the due date passed, and what happens next. Escalate on the schedule, not on frustration.

5. Make direct human contact before it ages out

Emails are easy to ignore; a respectful phone call is not. Before an invoice gets genuinely old, someone talks to the customer directly to understand the holdup and ask for a commitment. Often there is a fixable reason. A person who commits to a date on the phone usually pays.

6. Decide the endgame deliberately

When normal reminders have not worked, the owner or manager picks the path: a written payment plan, holding further service until the balance clears, handing it to a third party, or writing it off. Larger balances warrant more effort than small ones. Whatever the choice, it is a decision, not a thing that just happens by neglect.

7. Record every contact

Log every reminder, call, and promise against the invoice. A written trail tells you where each account stands, prevents double-chasing, and is what any escalation or write-off decision rests on. Collections you cannot see is collections you are not really doing.

Watch out for

• Chasing before confirming the debt is real. A misfired reminder over a paid or wrong invoice costs trust.
• Collecting by mood, not cadence. Quiet late accounts are the ones that age into losses.
• Never picking up the phone. Direct human contact collects what emails cannot.
• No decision at the end. An aging balance with no endgame is a slow write-off nobody chose.

References

• See related: The Refund and Credit SOP
• See related: The Job Closeout SOP
• SBA guidance on small-business accounts receivable and cash flow
• Trade-standard practice for field-service collections