What to do When Your Client Doesn’t Want to Pay

Most clients will be happy to pay for goods or services you’ve provided; however, there are some clients who will delay payment for as long as they can or, even worse, decide not to pay you at all.

It can be difficult to know what to do in this situation. Here are some tips to help you:

The Gentle Approach

Some of you may have built up a friendly relationship with a particular client but that doesn’t mean you should let them take advantage of your good nature. In this instance, you should remain friendly and professional. Ask the client if they are having problems with the payment and, if so, you can ask them to pay you in instalments, if this is convenient. Some clients may be busy and will just need a friendly reminder. Give them a call and follow it up by email, with the original invoice attached. Give them a deadline for payment. If you still don’t receive any payment from the client, you should try the firm approach.

The Firm Approach

It doesn’t matter whether or not you have a good relationship with the client. If you’ve provided goods or services and they haven’t paid you, then you are entitled to take legal action.

You should contact the client and give them one more chance to pay. Tell them that if you don’t receive payment immediately you will have no choice but to take things further.

You should then decide whether to use a collections agency or a small claims court. If you still don’t receive payment from the client, contact a collections agency or a lawyer and let the client know that you’ve issued legal action against them.

What to do in future

If you have taken legal action to get money owed to you from a client, you may be wondering how you can stop this happening in the future. Here are some things you can do to minimize the risks: Prepare a contract containing guidelines for late payment and issue to all clients before you provide them with any goods or services. Ask the client to sign the contract, so you have a legally binding agreement.

You could include a clause stating late payment will result in extra costs for the client. For more expensive jobs, ask the client to pay a deposit for at least half of the total cost. If you aren’t sure what the final costs will be, ask them to pay half of your estimated costs

You can ask the client to pay the total cost upfront. Not all clients will be happy with this, but at least you won’t have to worry about non-payment. If you provide products, you could ask the client to pay a deposit and provide them with a sample of the finished product. Ask them for the rest of the payment before issuing them with the completed product.

If you are unsure of a new client, try to perform some background, or credit, checks before you work with them or you could ask other people in your industry if they’ve had any problems with them. It is not unreasonable to expect to be paid for doing a job. Unfortunately, some people disagree and they will try every trick to avoid paying you.

Make sure you keep copies of all emails and letters you’ve sent to try to obtain payment, before taking legal action. This should give you the best chance of winning, should you have to go to court.

Guest post by Safe Collections. Helping businesses of all sizes effectively manage their cash flow since 1984.