My blog is full of practical solutions to the challenges you face as a small business owner.

“Grow your business without driving yourself crazy!” is my slogan. My strength is helping you run your business so that you grow to the size you want, put more money in your pocket, and don’t have to work so dang hard!

What are your growth questions and challenges? Ask me here, and I’ll do my best to answer them.

Mike Van Horn

Q. What’s the best way to deal with non-paying or late-paying clients?
I’d like to try to avoid lawsuits, and I’d also like to maintain a positive relationship.

A. Set up a merchant account or Paypal account, so that they pay when the service is performed. Or even earlier, when they book your services.

Get a prepayment or a deposit.

If you must invoice, then specify your terms in writing. If it is “net 30” then if they haven’t paid by day 31, give them a reminder call. “We didn’t receive your payment. When can I expect that? Can I get a credit card number to handle that?” The one who asks gets paid. The longer you let it go, the harder it is to get paid.

Ask if there were any difficulties. Were they unhappy with your work? Was something not complete? How could that be corrected?

If they don’t pay, have a sequence a steps to take:

– Have somebody else besides yourself call, who is friendly but firm, and will not be sidetracked by sad stories and excuses.

– Send a letter.

– Send an attorney letter.

– For an ongoing customer, say, “We will be glad to continue our work for you when we receive a payment.”

– Take them to small claims court. Much easier than filing a lawsuit. Getting a summons to arrear in court shakes many old payments loose.

“Maintaining a positive relationship” with somebody who is purposefully withholding money they owe you should not deter you from taking forceful steps.

On the other hand, if they don’t have any money, or you can see you’re not likely to get paid, and it’s not a huge sum, then let it go. Don’t make your life about this issue.

But don’t do business with them again.

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