What to Do When a Customer Just Won't Pay

You delivered. You invoiced ₦850,000 on Net 30. It is now day 92. Your emails get no reply, your calls ring out, and the last time you got through, the person said "we are processing it" and hung up. This is the part of accounts receivable that has no clean answer, only a sequence of decisions where the order matters.

First, work out which problem you have

Three very different customers hide behind the same silence, and treating them alike is how you lose the money.

The can't-pay customer has no cash. Their own customers are late, or they are in trouble. They avoid you because they have nothing to tell you. This one is often recoverable if you get in front of the other people they owe.

The won't-pay customer has the money and has decided you are not urgent. Large buyers do this routinely. Your invoice sits in a queue behind suppliers who make noise. Nothing is broken in their business. They are spending your money a while longer because it costs them nothing.

The disputing customer thinks they do not owe you, or do not owe you all of it. Maybe the work was late, the quantity was short, or nobody told them the price. Half the time the dispute is real and nobody on your side ever heard about it, because it was raised to a junior person who never passed it on. Silence is often a dispute you have not been told about.

You find out which one you have with a phone call, not an email. Ask directly: is there a problem with the invoice, or is this a timing issue? A can't-pay customer will negotiate. A won't-pay customer will make vague noises. A disputing customer will suddenly have a lot to say.

Your options, in order of cost

Work down this list. Every step you skip makes the next one more expensive.

1. A direct conversation with the person who signs. Not accounts payable, not your usual contact. Call the owner or the finance lead, be calm, and ask for a payment date. Most stuck invoices come loose here.
2. A written payment plan. For a can't-pay customer, ₦850,000 over four months beats ₦850,000 in principle. Get it in writing, with dates and amounts, and treat a missed instalment as a broken agreement.
3. Pause future work. This is your strongest lever and small suppliers use it far too late. Stop the next delivery, stop the next print run, stop the support. Say it plainly: work resumes when the account is current. If the customer needs you, this settles it in a week.
4. A formal demand letter. A short letter stating the amount, the dates, the evidence, a deadline, and what happens next. It costs little and changes the tone from chasing to enforcing. Send it by email and hard copy.
5. A debt collection agency. They take 15% to 30% of what they recover, and only accept debts they think are collectable. Fine for a customer who can pay, useless for one who genuinely cannot.
6. Small claims or court. Sometimes the right answer, but see below.
7. Write it off. Also a decision, and sometimes the correct one.

Be honest about the maths of suing

Suing over ₦300,000 is almost never worth it. Filing costs, a lawyer's time, your own time, and months of waiting will consume most of the amount even if you win. Then you still have to enforce the judgment against someone who already does not pay when asked. A cheerful lawyer will take the case. You will not come out ahead.

The calculation changes with size and with the debtor. A ₦5,000,000 invoice against a solvent, registered company with assets and a reputation is worth pursuing, and the credible threat of it often produces payment before you file. A ₦300,000 invoice against a business that has already stopped answering the phone is a lesson, not a case.

Writing it off, properly

At some point the invoice is costing you more in attention than it will ever return. Write it off, record it as a bad debt, and stop the customer from buying again on credit. Close it in your books so your receivables stop showing money that is never arriving and your aging report reflects reality. A receivables list padded with debts you have privately given up on is worse than useless: you start ignoring all of it.

The real fix is upstream

Every bad debt was preventable at the start. Deposits on large jobs. Credit limits per customer, so no single one can run up ₦2,000,000 of exposure by accident. New customers on due-on-receipt or Net 15 until they have paid you a few times. And chasing from day one, politely, so that being late with you is mildly uncomfortable rather than free. You cannot collect your way out of a customer you should never have extended credit to.

Catching it before it gets here

The invoices that reach 90 days rarely surprise anyone in hindsight. They were late at 15, ignored at 30, and quietly parked at 60. Arvalox ages every invoice by risk, flags the customers whose behaviour is drifting, and keeps the reminders going from before the due date, so the conversation happens while it is still a timing problem instead of a bad debt.