You Are Not Slow at Collecting. You Never Set the Terms.

A plumbing company could not say when the clock on its net-45 terms actually started.

Invoice date, approval date, or the date a document was accepted into the customer's portal — all three were arguable, and which one applied decided whether a large share of the receivable was late or perfectly current. Nobody had ever settled it, and the contract did not say.

What Payment Terms Should a Contractor Actually Set?

Terms that name a trigger, a deadline, a consequence, and a person. Most contractor terms name only the deadline, which is why they do not function. Net 30 with no defined start date, no fee that is ever charged, and nobody responsible for enforcing it is a preference, not a term.

The trigger is the part most often left vague and the part that decides everything downstream. Invoice date is the cleanest default because you control it. Approval date and portal-acceptance date both hand the clock to the customer.

The consequence has to be something you will actually do. A fee you never charge or a work stoppage you never execute teaches customers exactly how much your terms are worth.

Why Does a Balance Age When the Terms Were Clear?

Because terms are enforced at the aging report, months after the only moment they could have been enforced, which was at the job. By the time a balance shows up in the 60-day column, every decision that mattered has already been made.

At one trades client of ours, a review found roughly half of open invoices aged past 120 days. A significant share traced back not to refusal but to setup and process: invoices routed to the wrong customer record, and work billed through a customer portal where net-45 terms may or may not have started when the invoice was sent. Late fees were printed on every invoice and had been charged almost never.

None of that is a collections failure. All of it was decided before anyone looked at an aging report.

When Does the Clock on Net 45 Actually Start?

Whenever your contract says it does, and if your contract does not say, whenever your customer decides it does. That is the entire risk in one sentence.

Large commercial customers and property managers increasingly accept invoices through a portal, which introduces at least three candidate start dates: when you sent it, when the portal accepted it, and when an approver inside the customer released it. The gap between the first and the third is routinely two to four weeks, which turns net 45 into net 60 or worse without anyone changing a term.

Fix this in the contract, not in collections. One sentence naming the invoice date as the trigger is worth more than a year of follow-up calls, and it is the cheapest change on this list.

What Happens When Technicians Do Not Collect at Completion?

You convert a cash sale into a receivable for free, and you do it on the jobs least worth financing — small, direct, one-off work where the margin does not cover the carrying cost.

At another trades client, a review of direct customer work found technicians were not consistently collecting a deposit or payment when the job was finished. The correction was a documented policy: card payment, a deposit, or payment in full at completion, supported by an invoice and a scope of work handed over at the same time. That last part matters, because a technician asking for money without a document is asking for a favour.

The same review turned up the mirror image of the problem: work that had been done and never billed at all. A reconciliation against one customer surfaced nine completed jobs with no invoice behind them, which the customer acknowledged once it was put in front of them. Unbilled work does not appear on an aging report by definition, so it is invisible to exactly the meeting that would have caught it.

This is the single highest-return change in the list because it removes the receivable rather than collecting it.

What Does an Escalation Ladder Look Like for a Licensed Trade?

It has more rungs than most contractors use, and the later ones carry real weight. Written demand, then a complaint to the licensing board where the customer is itself a licensed operator, then a claim against the bond.

At the same client, the aging report was exported and rebuilt as a working document with notes and a named owner against every account, kept as a single master copy rather than re-exported each week. Accounts moved through the ladder deliberately: a written demand with a fixed response window, a board complaint where one applied, and a bond claim reserved for accounts where board action had not produced payment. One account near six figures was moved onto a structured weekly schedule with a larger up-front principal payment rather than being pursued all at once. Another was converted from irregular card payments to recurring billing with the late fees documented.

One practical limit worth knowing: bond recovery depends on the other party still holding a bond. On that same list, one account belonged to a company that had closed and no longer carried licensing, insurance or bond documentation, which removed the strongest rung entirely and left a payment plan as the realistic option.

Should You Stop Work on a Delinquent Account?

Sometimes, and the decision should be made before the account is delinquent rather than during the argument. Deciding in the moment means deciding while somebody senior is defending a relationship.

The version that works is a threshold agreed in advance: at a stated balance or a stated age, new work requires payment of the outstanding amount or moves to cash on delivery. Applied consistently it is a policy. Applied selectively it is a punishment, and customers can tell the difference.

At the client above, the debate on one significantly delinquent account came down to relationship risk, and the decision was a carefully worded letter first, with a work stoppage or cash-on-delivery terms held in reserve if the silence continued. That is a reasonable sequence. What is not reasonable is having the conversation for the first time at ninety days. Trades-specific financial leadership usually starts by writing the threshold down.

What Does Backbone CFO Change First?

The trigger date and the completion-payment policy, in that order, because both are contract and process changes rather than effort changes and both stop new receivables from forming.

Then the aging report becomes a working document instead of a report: one master copy, a note and an owner against every account, and a fixed ladder with dates. That combination usually moves more money in a quarter than adding a collections person would.

Accounts already on a working payment plan usually get left alone, and that is the right call. At the client above, several plans were running and the decision each week was simply to confirm the payment had landed rather than to renegotiate. The discipline is in not treating a performing plan as an open item; it consumes the same meeting attention as a silent account and produces none of the risk.

What we generally do not recommend first is tightening credit at the front end. Most trades businesses at this size do not have a customer-quality problem. They have a moment-of-service problem, and the money was collectible on the day the work was done.