Collecting from Late-Paying Clients

August 19, 2014 · 1 comment

in Finances

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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Paypal Alternatives June 7, 2016 at 8:03 am

Mike,

Great info in this post. Trying to get late payment from customers is a slippery slope, since you don’t want to hurt your relationship with the customer. A merchant account or deposit are some great tips to avoid this problem. Your tips here seem to maintain a positive business/customer relationship.

Thanks for the post. Hope to connect soon.

Dennis

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