Late payments are a growing challenge for businesses, with increasing economic uncertainty amplifying the risks associated with cash flow disruptions.
For the first time, an exclusive survey from The Kaplan Group reveals the preventive strategies that distinguish companies excelling in collections from those facing persistent payment delays.
The survey was conducted among 100 financial decision makers, including CFOs, VPs of finance, controllers, and directors of finance, representing businesses with under $10 million to over $1 billion in revenue.
For businesses, maintaining steady cash flow is essential for growth and stability.
- Implementing preventive payment strategies can reduce dependency on collection agencies, minimize disputes, and accelerate payment timelines.
- Companies that proactively enforce payment policies recover revenue faster and reduce financial strain.
A strong preventive strategy goes beyond just getting paid on time. It’s about creating a seamless and predictable cash flow. Businesses that invest in structured payment processes see fewer late payments and stronger financial stability.
Key Findings from the Survey
- Companies with DSO under 30 days are more likely to conduct regular payment performance reviews, while credit checks for new customers are less commonly used.
- 62% of all companies enforce clear payment terms in contracts, with high-performing businesses using this strategy at an even higher rate.
- 50% of companies use automated invoice reminders, but only 20% of companies with DSO over 90 days rely on them, suggesting a gap in adoption.
- 40% of businesses with high DSO require upfront deposits, which reduces risk but may limit customer acquisition.
- 80% of companies with long DSO conduct regular payment performance reviews, but often too late in the process.
More personalization is needed: Companies that successfully reduce late payments implement structured preventive measures to encourage timely payments and avoid collection delays.
What’s Working, and What Isn’t:
- Clear Payment Terms: Nearly 79% of companies with DSO under 30 days enforce clear payment terms in contracts, setting expectations upfront.
- Automated Reminders: Half of high-performing companies use automated invoice reminders, ensuring clients are consistently notified of due dates.
- Performance Reviews: Companies with DSO over 90 days are more likely to use payment performance reviews, but often too late in the process.
- Upfront Payments: 40% of companies with long DSOs require deposits or upfront payments, signaling financial caution but limiting deal flexibility.
Automation and structure are key. Companies that use proactive reminders and enforce clear terms from the start see fewer overdue invoices and maintain better client relationships.
| Preventive Measure | Overall Adoption Rate (%) | Under 30 Days (%) | Over 90 days (%) |
| Credit checks for new customers | 48% | 28% | 20% |
| Automated invoice reminders | 50% | 50% | 20% |
| Early payment incentives/discounts | 52% | 43% | 20% |
| Clear payment terms in contracts | 62% | 79% | 60% |
| Requiring deposits/upfront payments | 35% | 21% | 40% |
| Regular payment performance reviews | 24% | 36% | 80% |
Prevention is the Best Medicine:
Preventive measures are more effective when implemented before payment issues arise, rather than after overdue invoices accumulate.
- Companies with lower DSO use automated processes and clear agreements, while those struggling with late payments rely on reactive collection methods.
- Requiring deposits is a double-edged sword—it reduces risk but may deter potential clients.
But, one size doesn’t fit all: While automated reminders and clear payment terms work for most businesses, some industries (e.g., B2B services) require more personalized outreach.
- Credit checks can reduce risk but may also slow the sales process, making them less popular among fast-growing businesses.
What’s Next:
Businesses should adopt preventive payment strategies, such as automated invoicing, clear contract terms, and structured follow-ups.
- Companies struggling with high DSO should reassess their preventive policies to identify gaps in their collection processes.
- Firms can use regular payment performance reviews earlier in the cycle to identify clients with late payment tendencies before issues escalate.
To reduce late payments, companies must move beyond reactive collections and implement structured, preventive measures.
Automating reminders, setting clear payment terms, and conducting regular payment reviews should be standard practice. Businesses that prioritize these steps will see stronger cash flow and fewer overdue accounts.
Methodology
- This new survey was conducted in February 2025.
- An exclusive cohort of 100 key financial decision-makers (CFOs, VPs of finance, controllers, and directors of finance) participated, representing small businesses to large enterprises (under $10M to $1B+ revenue).
- The survey analyzed preventive payment measures, their adoption rates, and their impact on reducing late payments.
- Data was segmented by DSO performance to identify which strategies lead to better collection outcomes.
