Many business owners have experienced the frustration of trying to collect payment from a client who simply won’t cough up. If you are having trouble getting paid, then it is important to take action quickly before the situation becomes even more difficult. So what can you do when your clients won’t pay and how can you avoid this from happening in the future?
Don’t Make Assumptions
When your client does not pay, it is easy to assume that they are being completely irresponsible. However, sometimes clients have legitimate reasons for why payment has not been sent out. It’s important that you don’t accuse them of anything until you know the full story. This is especially true if your client has always been reliable in the past – give them the benefit of the doubt.
Keep Your Cool
In the heat of the moment, it can be easy to want to send a strongly worded email or make an angry phone call in order to get your point across. However, if you take this approach, then there is a good chance that you will only make matters worse and put future business at risk. It’s important not to jump the gun.
Send Reminders
Your clients are only human. If a client is late to pay, resend the invoice along with a polite notice that their payment is now overdue. Don’t be demanding or accusatory. You should also make it as easy as possible for them to pay by including links or buttons to your accepted methods of online payment. Give them a specific payment deadline. This makes it easier to chase if the payment still doesn’t materialise. Let them know the matter will be escalated if they miss a second deadline.
Contact Them Via Social Media
If your client doesn’t respond to your follow-up emails within a few business days, try contacting them on social media instead. In some cases, a client might simply be neglecting their inbox and so it’s worth trying another channel. Again, it’s important to maintain professionalism and not accuse them of disappearing on you.
Refer to a Debt Recovery Company.
If you still have not received your payment then it’s time to send a debt recovery letter.. You can arrange this for an affordable fee and often the client will be unnerved enough by the suggestion of legal action that they pay up.
Small Claims Court
If you have exhausted all other options, then it’s time to take your client to small claims court. This is a last resort and it’s a fairly costly option, so it’s important to weigh up whether or not it’s worth it. Unfortunately, if this is not the case then it’s best to cut your losses and focus on preventing this kind of behaviour in the future.
Protect Yourself
It’s always better to be safe than sorry. Take steps now that will protect you in the future and avoid having this problem again.
Make sure you have signed letters of engagement or contracts before engaging in any work for your client. It demonstrates commitment from both parties and you are in a better place to take action if the client fails to pay.
Make sure you have full contact details. Always obtain a postal address. An email address and phone number is not enough to successfully chase a debt if it occurs.
Offer a prompt payment discount to encourage clients to pay on time. Include the terms in your contract.
Collecting payments by Direct Debit reduces the administrative burden on both you and your client and maintains a regular cash flow.
If they don’t pay by Direct Debit, make sure that all of your clients are aware of how and when to pay online and that they have instant access to your bank account details at any time.
Where appropriate, consider asking for payment upfront.. This could be a 30%, 50% or even 100% deposit.
Finally, make sure that you have the right legal contracts in place so that you are better able to take action if a client still fails to pay.
Conclusion
If you find yourself in a situation where your client hasn’t paid you, it’s important to keep calm and take the proper steps. Make sure that before taking legal action, you’ve exhausted all other options by sending reminders and direct messages on social media. If these tactics still do not work, then consider contacting a debt collection agency or small claims court. Finally, make sure to put the right steps in place to protect yourself against this situation in the future so that you can concentrate on running your business rather than chasing up payments.