A five-step reminder plan that gets customers to pay on time

A reply in SaaStr's "Dear SaaStr" advice column offers a five-step plan for getting customers to pay on time. The core idea is to start early and keep reminding. The writer says the process was fairly easy once it was worked out, and that it resulted in a very high level of payment.

Start 60 days out

The first step is to tell customers 60 days before renewal that they have 60 days to pay, and to send a proper corporate invoice. Most small businesses will ignore this. Larger companies will pass it to their finance or accounting team, which needs more than 30 days to pay. The column says 30 days is not enough for big customers, and an early notice starts their internal process.

Follow up as the date nears

• At 30 days before renewal, remind customers to pay now to avoid a service interruption. The column says this is when smaller businesses pay attention.
• At 7 days, if they still have not paid, warn them that service will stop on a specific date. Send an email and also make a phone call.

Grace period and the red banner

After the renewal date passes, the plan gives a 7 day grace period. A customer who calls, asks for more time and promises payment can get an extension. The column also adds a big red banner on the website, shown at every login. It counts down to the day service shuts off for nonpayment, so nothing comes as a surprise.

Shut off or keep running

What happens next depends on the customer. For low-end customers, the column suggests service can be shut off after all those notices, with instant resumption once payment arrives.

For higher-end customers, it says never shut down a mission-critical service. Instead, hold back extras. No feature changes and no added seats, meaning extra user accounts, until the payment is in.

What is not known

The column does not say how many customers pay on time, how much faster they pay, or what kind of company tried the plan. "A very high level of payment" is the only result given. Any business that bills on renewal would need to test the timing against its own customers.