What To Do When Clients Don’t Pay

“Hope for the best but prepare for the worst,” is a wise maxim to follow when it comes to receiving payment for your labour.

You can get the money your clients owe you by putting collection processes in place before you start working and using them when it is time to collect.

If your company uses an invoicing system, you may be familiar with late and even nonpayment.

Customers may not pay invoices on time (or at all) for a variety of reasons.

This includes missing bills and unforeseen additional costs that customers later realise they cannot afford.

Many small business owners find it difficult to politely request past-due payments.

Nevertheless, an unpaid invoice affects your firm regardless of the situation.

You must take action to maintain a healthy cash flow.

The key is to be open and honest with your clients and prepare backup plans.

How to Collect Overdue Payments

Sometimes, no matter what you do to avoid the problem, you still end up with nothing.

After taking all the necessary steps, if your clients still don’t pay the invoice, you must move quickly.

Here is how to handle the circumstance.

Weigh your options

Consider whether going after the clients is truly worthwhile.

If the cash represents a small portion of your annual income, it could be preferable to let it go and write off the clients for future business.

You can end up investing more time and resources than the bill is worth.

In the best-case scenario, you will still be responsible for paying your own legal expenses to collect if you have a case that can be won and the defendant has the means to pay and doesn’t file for bankruptcy.

And depending on how complicated the case is, those can number in the tens or even hundreds of thousands.

Read: The Importance of Boundaries: How to Set Limits as a Freelancer Without Losing Clients

Follow up

If the client doesn’t pay the invoice by the specified date, don’t be afraid to send them an email.

There’s always a chance that they misplaced the invoice or that it never got to them.

Perhaps the client had a family emergency or was on vacation.

Because the client didn’t pay on time, you shouldn’t presume that they are a deadbeat right away.

If you aren’t getting paid or haven’t heard back about it, send the invoice again as a reminder.

The automated invoice serves as a reminder of the due balance without giving the impression that you are personally pressuring the customer.

In a polite but firm email, remind them that the invoice is overdue and that you would like to address the situation as soon as possible.

Additionally, find out if they have any complaints about the goods or services you gave them or if they require help making a payment.

Read: How to Incentivize Clients for Powerful Referrals

Contact via social media

If you repeatedly send emails, bills, and reminders, you might need to use another channel of contact to comfort yourself.

This is where social media comes in.

Most businesses have a presence online, whether on Facebook, Twitter, LinkedIn, or another platform.

Use these channels to contact them and ask them politely to get back to you.

Although getting ghosted is never a pleasant experience, professionalism should always be maintained, especially if you are also representing your company.

Read: Build Trust: Turn Happy Clients into Brand Ambassadors

Send a debt collection letter

A reminder is less formal than a letter of collection.

It contains the date that payment was due and offers a window of time for sending payment, which is normally two weeks.

It also lists the payment methods you accept and promises to take action if you aren’t paid.

You can make a general suggestion (such as “to prevent further action”) or a more direct declaration that you’ll hire a collection agency or file a lawsuit as your next course of action.

Your decision will be influenced by the amount owed, the amount of time that has passed, and maybe your desire to keep this client for future business transactions.

Read: Clients & Deadlines: Handling Time-Related Queries

Reach out legally

You should have a lawyer create a letter if your clients are still unaccounted for at this stage.

The threat of legal action may occasionally prompt the customer to get in touch with you and, at the absolute least, make payment arrangements.

You can either ask on freelance forums or pay an inexpensive cost for an attorney letter.

If you find yourself in a tight spot, you could also want to contact legal aid attorneys.

Consider using small claims court as a last option.

It’s crucial to balance the amount the client owes you against the costs of following up because these choices are expensive.

If the statistics simply don’t add up, it could be time to cut your losses and move on.

Send a final demand letter

Send a final demand letter if the client hasn’t paid you before bringing legal action.

The final demand is very similar to the debt collection letter previously mentioned.

Still, it typically states more explicitly that you intend to file a lawsuit if the client doesn’t pay.

An attorney on retainer may also write a final demand letter.

The letter’s content should be the same regardless of who sends it, but when a lawyer makes a demand, it typically garners more attention and weight.

There is no obligation to retain the attorney if you subsequently decide to file a lawsuit unless you and the attorney agree differently.

The cost of hiring an attorney to draft a letter is significantly lower than the cost of hiring the attorney to represent you in court.

Disable or withhold the final product

You cannot stop working on a project that has already been completed.

But until you get paid, you might be able to keep it away from your client.

Keep your access to client projects restricted until all outstanding debts have been settled.

If the customer then tries to avoid paying you for your services, you may prevent them from using the project.

It could seem insignificant, but it is completely reasonable because your contract specifies that you would provide the finished product in exchange for a specific sum of money.

If you don’t get paid, the client shouldn’t get their website or app.

Conclusion

When dealing with clients who won’t pay, it’s crucial to remember that each circumstance is distinct and must be carefully examined before any action is taken.

For what it’s worth, you can’t approach devoted customers the same way you do new ones.

You don’t want to sever a strong working relationship over a single late payment.

Always attempt to resolve a situation with a polite chat when a client refuses to pay.

However, if things spiral out of control, keep in mind that the law is usually on your side in such circumstances.

Before You Go…

Hey, thank you for reading this blog post to the end. I hope it was helpful. Let me tell you a little bit about Nicholas Idoko Technologies.

We help businesses and companies build an online presence by developing web, mobile, desktop, and blockchain applications.

We also help aspiring software developers and programmers learn the skills they need to have a successful career.

Take your first step to becoming a programming expert by joining our Learn To Code academy today!

Be sure to contact us if you need more information or have any questions! We are readily available.