If your small business has been open any length of time, you’ve already had to face the unfortunate reality of late payments—or no payment at all.

About 40 percent of firms the National Federation of Independent Businesses Surveyed say receivables—money the are owed—is coming in late. That can cause plenty of pain for a small business owners that depends on regular cash flow to keep the ship afloat.

So how you can you deal with late paying clients? You can get proactive up front, and also follow up  with penalties on the back end, to discourage clients from paying late. Here are a few tips:

1. Be crystal clear about terms.
Be sure to spell out your payment terms on your invoice and other related paperwork, such as contracts, estimates, statements of work, etc.  If you expect a deposit up front, make it clear. If you need to be paid in increments, print it out. If you need payments within 30 days, say so. Put it in writing.

2.Charge interest for late payments.
You can put a note on all your invoices that late payments will be assessed interest at the current bank rates. In this case, the payment would be due within 30 days of billing in order to avoid the late charge.

3. Offer an early bird discount.
Offer to take 5 percent of the cost off of the project for paying on time. This is the opposite approach to charging late fees, but it can be an incentive for clients to pay early.

4. Know who to invoice.
It’s not always the best route to invoice the actual person at the client company with whom you work. You need a contact in accounts payable to be sure your invoice is landing in the hands of someone who can actually cut a check.

5. When the payment is late…
Don’t wait more than three days to reach out and inquire about the payment.

6. Contact an attorney.
Pre-paid legal services typically allow you to get an attorney to write a demand letter for free as part of a small monthly fee to the firm. The fee can range from $15 to $30 and can also come in handy for reviewing contracts and other small business services that come as part of the subscription package.

Check out this YouTube video for more tips on dealing with late payments: