Client Refusing To Pay Invoice? 5 Ways To Deal With Non-Paying Clients

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client refusing to pay invoice

One downside of being an entrepreneur is clients who pay late or not at all. Small business owners are most likely to face this problem. It’s usually because they are unsure about how to pursue these clients.

Are you a small business owner tired of having your invoices ignored? These tips can help you deal with a client refusing to pay an invoice.

Contact the Client

email clients

Email your clients and remind them that you haven’t received payment. If they don’t respond within a week, then send a follow-up. The person responsible for invoices might have been out of town, had an emergency or accidentally deleted the message. You can also try contacting them via social media (Facebook, Twitter, LinkedIn, etc.).

However, if these methods yield no results, then it’s time to place a phone call.

Talk to the client. You may need to call every day for a month and act like an absolute pest, but hey, you need the money. Make sure to leave a voicemail each time, explaining that the invoice is past due and you want to resolve the issue. This is a good time to ask if there was a problem with the service or product you provided. If the answer is no, then they should have no problem paying.

Offer Options

Sometimes, clients put off paying their invoices because (1) the payment method is inconvenient or (2) they’re having trouble with the payment system. In this case, often all they need is a friendly person to reach out and guide them through the process. If there is a problem with the system itself, offer another way they can pay you.

The client may also put off paying their bills because they’re having financial trouble. Be flexible in this scenario by working out a payment plan (a certain amount per month over a certain time period) or requesting a good faith payment now and the rest later. When you’re understanding with your clients, they’re more likely to stick around.

Settle for Less

If worst comes to worst, you can discount the bill. They’re likely to jump at the chance to pay less for the service and you’ll get money in your pocket sooner than the alternative. You may want to avoid potential future invoicing headaches by dropping the client, though.

Hire a Collection Agency

Emails, phone calls, and reminders have gone unanswered. In this case, business to business collections is a possible solution. A professional collection agency could contact the client and attempt to get your payment. This type of agency deals exclusively with business debts.

As long as your debt is business-related, then this type of agency can be your next best option. If you’re hesitant to go that far, a warning letter from a lawyer generally elicits a speedy reply.

Small Claims Court

small claims court

Small claims court allows you to present your case directly to a judge. Some states, such as Michigan and Nebraska, don’t allow lawyers in small claims court. If you live in one of those states, then it’s mandatory for you to represent yourself. But, in most states, legal representation is an option.

The cost of hiring a lawyer for small claims court is usually not cost efficient, so most people choose to represent themselves. However, using an attorney instead of a debt collection agency can result in a quicker resolution to the outstanding debt and the preservation of your business relationship.

Each state sets its own limit for the maximum amount you can request. The limit can be anywhere from $2,000 up to $10,000. Check with your state to see if your claim is eligible. If your claim exceeds state limits, then you need to file your case in another court.

See Also: How to Sue in Small Claims Court

Moving Forward with Problem Clients

Once the client has finally made the payment, you may want to make some adjustments to how you bill them in the future. For example:

  • Ask for a pre-payment or retainer, especially for larger projects.
  • Make them sign a contract before getting started. That way, if they go AWOL, you have a more straightforward route in place to go after them.
  • Ask for payment based on project milestones rather than dates. This makes sure you’re paid in full before the project is finished.

Conclusion

In a perfect world, you’d get every invoice paid in full and on time. in reality, however, you have to take action against a non-paying client. So, don’t hesitate to ask for the money you’re owed; you’ve already earned it.

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Author: Shae Holland

Shae Holland is a copywriter with over 3 years' experience in the field. If you liked this article, visit here.

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