8 Steps You Should Take When a Client Refuses to Pay

There are people who happily and willingly take advantage of the benefits that businesses and professionals offer to them. However, once the time comes when they need to pay, they might refuse to do so. This hurts your wallet and it can be very frustrating. They may have an excuse, but the one fact that does not change is that you are not getting paid.

For business owners and professionals, their first instinct when a client refuses to pay is to scream at the top of their lungs and spew out all the profanities that they could muster. However, you should NEVER do that when a client refuses to pay for the product or service that they received.

We understand that displaying anger is out of impulse, but your goal is to make your client settle his or her debt. If you want to achieve this, then you’ll need a bit of finesse.

Fortunately for you, we have compiled all the tips and tricks you can use which are guaranteed to help you make your client pay what’s owed to you.

Know Who You Are Dealing With

Before you do business with a client, it pays if you do a bit of background check on the person. What you are looking for are glowing reviews that have been written by both the homeowner and professionals. If this is not the case and what you find is a series of horror stories instead, then you will be better off without this particular job.

Check The Written Contract You Have With The Client

Always write up a contract for every job you work, even if it's for friends or family.
Always write up a contract for every job you work, even if it’s for friends or family.

Work may come from different places and sources. Whether you are dealing with a personal friend or a corporate client, it’s important that you draw up a contract before providing the service. You may think that it’s perfectly fine to do business with friends without a contract since you know these people personally. However, these people should understand the fact that business transactions, regardless of the relationship, have to be taken seriously.

If your client turns out to be a dud, the contract that both of you signed will be everything that you’ll need should the worst happen.

Call Daily

If you are having this particular issue with a client who’s part of another service company, we suggest you leave voicemails every single day. If you can, do this to both the CFO and the CEO’s mobile phones when applicable. Follow this tip and it’s likely that the company will end up paying. This may be a bit annoying, but collection agencies will charge you more if you let them handle the situation for you. Just do the job on your own because it will be worth it in the end.

Offer Options

Oftentimes, your client who’s trying everything to avoid paying is not doing so just to be nasty. What’s likely is that this client of yours is currently facing issues. What you can do is to reach out to the person. Then, assess the situation and see if you will be able to work something out that will benefit both parties, like a payment plan. For example, your payment plan can be X dollars per month over the following Y months. You can also accept payment in good faith. The rest will just follow after a while.

Find Out If It’s Worth It

There are business owners who would rather let collection companies do the work for them. However, they take as much as 30% of the money that has been collected from your clients. For example, if a client owes you $1,000 and the agents have successfully collected $700, then what you will end up with is not $700 but $490 instead.

Knowing this, you can decide whether you want a professional collection company to go after your clients. This will save you a great deal of time and headache. If you want to get paid directly and in the most immediate way, then do the collection yourself.

Consult With Your Lawyer

A letter from your lawyer will scare most people into paying.
A letter from your lawyer will scare most people into paying.

We recommend that you talk to a lawyer you trust before you do anything concerning your client. Having a lawyer draft a demand letter is easy. It can also be inexpensive. This will scare the client into giving you the full payment.

Reaching out legally by sending a letter that’s from a qualified attorney has worked many times for business owners and professionals alike. They do so even before they resort to hiring debt collection companies. A demand letter from a lawyer will also elicit a faster response compared to any other means.

Cut Your Losses

Of course, every necessary effort just to collect payment owed must be taken. However, if your methods of collection prove to be more expensive than the money owed, then you might as well drop it altogether to protect your end.

As they say, a single bad relationship with a customer can sour others. This means that you need to be very careful and try not to create an enemy regardless of who is wrong or right. Remember, it’s sometimes best to cut your losses early. At the very least, you can still do business with the neighboring homeowners or companies.

Give a Discount

There is an alternative that will allow you to avoid making use of the help of a debt collection agency, and that’s by giving the client a discount on what he or she owes. Collections agencies are going to cut a good percentage to the money they’ve collected, so why not just give the client a discount? Anyway, you would have given it to the agents. The end result? Your money will arrive in your pockets way sooner.

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