Payment Policies to End Late-Invoice Stress for Mental Health Practices 

Late payments can seriously hurt your mental health practice’s cash flow. In Canada, 46% of B2B invoices are overdue on average, negatively impacting cash flow. For solo practitioners, lost revenue can mean the difference between thriving and just surviving. 

Fortunately, you can dramatically reduce late payments with the right policies and systems. Here are five proven strategies that work specifically for Canadian mental health professionals. 

1. Set Clear Payment Terms From Day One 

Your payment terms should be crystal clear before you provide any services. Include specific due dates, late payment penalties, and accepted payment methods in both your service contracts and invoices. 

For most mental health practices, Net 30 terms work well. This means payment is due within 30 days of the invoice date. However, many practitioners find success with shorter terms like Net 15 or even payment due at the time of service. 

If your practice allows direct billing to insurance providers, ensure your terms account for the additional complexity. Many practice management systems can streamline this process, but it’s important to clearly communicate how and when payments will be processed. 

Additionally, some practices prefer to charge clients at the time of service, often using e-transfer, credit/debit cards, or even cash. If this is your approach, make sure clients are aware of this policy upfront to avoid confusion. 

Make sure your terms cover: 

• Exact due date (not just “30 days”) 

• Late payment fees (typically 1.5% per month in Canada) 
• Accepted payment methods 
• What happens if payment is missed 

According to Sage, clear payment terms prevent delays by making client obligations explicit from the start. When clients know exactly what’s expected, they’re much more likely to pay on time. 

2. Use Card-on-File for Recurring Sessions 

If you see clients regularly, storing their payment information securely can eliminate most payment delays. With proper consent, you can automatically charge their card after each session or on a predetermined schedule. 

This approach works well for: 

• Weekly therapy sessions 
• Monthly check-ins 
• Package deals or treatment plans 

Ensure compliance with Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA). Always get written consent before storing payment information, and use a secure, PCI-compliant payment processor. 

Card-on-file systems not only simplify billing but also reduce no-show risks in health practices. When clients know their card will be charged automatically, they’re more likely to attend their sessions or provide proper notice of cancellation. 

3. Set Up Automated Payment Reminders 

Manual follow-up is time-consuming. Instead, use automated systems to send polite reminders before and after due dates. 

A typical reminder schedule might look like: 

• 7 days before due date: Friendly reminder 
• Due date: Invoice due today notice 
• 7 days overdue: First overdue notice 
• 15 days overdue: Second overdue notice 
• 30 days overdue: Final notice 

A modern practice management platform accounting tool like Xero can integrate these reminders with your accounting system, automatically tracking which clients have been contacted and when.  

4. Offer Flexible Payment Options and Incentives 

The easier you make it to pay, the faster you’ll get paid. Offer multiple payment methods including: 

• Electronic funds transfer (EFT) 
• Credit and debit cards 
• Online payment portals 
• Payment plans for larger amounts 

Consider offering early payment discounts too. Even a 2% discount for payment within 10 days can motivate clients to prioritize your invoice. This strategy builds trust while protecting your cash flow. 

Flexible payment terms can significantly improve collection rates, especially in service-based businesses like mental health practices. 

5. Monitor and Follow Up Professionally 

Track your overdue invoices weekly and follow up consistently. Start with a friendly email or text, then escalate to a phone call if needed. Remember, many late payments happen simply because clients forgot or got busy – not because they can’t or won’t pay. 

When following up: 

• Stay professional and empathetic 
• Assume positive intent 
• Offer payment plan options if needed 
• Document all communications 

Only implement late fees as a last resort, and make sure they comply with CRA guidelines and your provincial regulations. The goal is to maintain good relationships while recovering what you’re owed. 

Consistent, respectful follow-up maintains client relationships while effectively recovering funds. 

The Bottom Line 

Late payments don’t have to be a constant source of stress. By implementing clear policies and leveraging automated systems, you can improve your collection rates with consistent follow-up. Start with one or two of these strategies and build from there. Your future self (and your bank account) will thank you. 

Consider taking a self-assessment and get your personalized Financial Wellness Blueprint to better understand your practice’s financial health and identify the biggest opportunities for improving your cash flow.