I have few ideas in mind (do you use any of these?):
1) Levy a penalty for not paying on time.
2) send phone reminders
In the contract you include interests for non payment (there are limitations - depends on the country). You should give him bonus for paying on time (eg. 5% off).
Give a short time for complaint - include a clause that if no complaint is officially filed the service is deemed accepted.
Ask the Client to give you a confirmation when he receives your invoice, and when your service is performed/received. Keep track of everyting you do for him and confirm in writing (e-mail is enough) that he accepts it.
Please NEVER trust anyone - I know small family businesses with over $100K of unpaid invoices. Trust is good, but everything changes when you realise you were screwd and did nothing to prevent it.
Practice shows that calling every single day is an efficient motivator. Your Client probably delays payments to others as well, when you bother him a lot you'll be the first he pays to.
Give deadlines and keep them. Ask him always to pay today, not tomorrow, not by the end of the week. Escalate sanctions. If you shoot all your weapons in the beginning, you will have nothing to say to him later. So first tell him that if doesnt pay today, you will remind him every day. Then tell him that he lost his bonus, then that you will charge interests, then that you will stop the service, then that you will contact a debt collection agency/lawyer.
Ask him to make smaller partial payments (could be use in court as a debt acknowledgement.
Be always mentally/financially prepared you'll not receive these payments at all. And act fast, statistics show that succes rate drops dramatically when invoices are older than 6 months.
Cheers!
Edit: Also, is there a standar contract template for a vendor/contractor that lays down these conditions in legit manner. For instance, how much interest you can legitimately charge for each day delayed ETC. Just curious.
Usually there would be a small set-up fee ($50-100) and commission fee for successfully collected moneyes (8-25%, depends on the debtor's country).
Today everything is done on-line, so you don't have to actually be there.
No standard template, sorry ;) Everything depends on the country/state. Btw that's what lawyers are for :) Over here it's 14% a year by the law itself, you don't have to mention it in your contract/agreement, but also you can agree on more/less. However it cannot be 1000%, because it's against the Civil Code. In some countries you can also collect the "collection costs". In some other you cannot. No simple answer.
The best way to adjust client's "too-busy-for-me" attitude is to push client's weak spot.
It could be delaying deliverable (until fully paid), it could be disabling features (until fully paid), it could be threat of blogging about client's ability to pay (scares the shit out of clients who are thriving for public impression of success), it could be requirement to pay upfront 50%-100% of contract cost.
The key is to be subtle but clear without threats or pressure by presenting your game as business as usual, giving client clear and easy way to solve all issues by paying.
Through all of your DAILY actions and communications directly with the person who makes the decision to pay, you are able to be devoted to re-establishing the healthy mutual interest of your client towards you. It's a person-to-person relationship, and it is a person's decision to pay you, and to maintain the relationship with you on acceptable terms. Talk to them on the telephone; email reminders are not enough.
Your repeated and daily, person-to-person statement of expectation and requirement that the client respect the relationship, and the reciprocity of the relationship, and your terms may be successful. Ultimately, if you are not important to them, they are not important to you.
One perspective: let them practice, for a week or two via these daily personal communications, where the daily opportunity to make good on the commitment and recognition of your importance, whether in daily partial payments, or a payment in full is a daily decision on their part that you are in active and personal communication about.
Eventually comes the point of time, after this ragular and daily communication, and the daily decisions on their part, for you to make clear that no work will be done until the invoice is brought up to date, and paid in full, and furthermore, that all future work will be conducted on a different basis that you establish that does not allow any payments to be delayed in any instance, as the client has demonstrated by action, and daily decisions, that you are not important to them. Invite them to commit to your being important to them.
Then, refuse to start new work until the previous job is paid up (or... insist on payment in advance).
This will result in you either getting paid on time (or early), or the client going elsewhere.
Either way... the problem client is solved.
From now on, get full payment in advance. Explain to him why. Give him the truth.
Contracts are often more trouble than they're worth. You need leverage. If you have that, use it. And refuse to do any more work until you're 1) paid in full and 2) paid in advance.
If you don't do this, your problems will continue and you will have no one to blame but yourself.
