Being in business has many rewards. We needn’t tell you that but due to the subject matter, it’s always good to remember why you started your business – because it’s rewarding!
But entrepreneurship also has its annoyances, like when a client won’t pay up. You’ve done your best to get that invoice paid. You’ve sent notices. You’ve phoned. You feel like the client is avoiding you. And there’s nothing more annoying than rendering a service or selling goods the client won’t pony up for.
So, is a client refusing to pay? Read on to find out some great ways to get what you’re owed.
Know Who You’re Dealing with
We realize this is retroactive but if you’ve had more than one client refuse to pay, then maybe it’s time to think about doing your homework before entering a relationship with a potential client.
Everyone’s anxious to build their customer base at the outset, but time is a teacher. So is research. Find out whatever you can about your potential client. Do they have a reputation of failing to make good on their commitments? Have they refused to pay other vendors?
Sometimes foresight is the 20/20 vision you need, making hindsight much less traumatic to behold.
Get It In Writing
Let’s face it – a handshake isn’t going to cut it. While most people are going to deal with you in good faith, the bad apples are out there. Having a contract in place at the outset is your best defense against clients not paying.
Set out a payment schedule, with amounts and dates, as well as interest you’ll be charging on outstanding amounts (or late fees, as the case may be). Should the client default, that’s actionable and your detailed contract is your ace in the hole.
Big Project? Upfront Payment
Now that you’ve got a detailed contract in place with your client, it should also stipulate upfront costs to get the project started. This is especially important for larger projects.
Should the first payment not be forthcoming (according to that same contract), you’re positioned to stop working until payment is made. If that first payment is the upfront, agreed upon payment, the project is a “no go”.
If none of the measures discussed above has compelled your client to behave honorably and if you’ve tried everything short of parking outside the client’s home in a white panel van, then maybe it’s time to get legal with it.
While it’s not worth the time, effort or anxiety to chase minor accounts, when thousands of dollars are involved, retaining legal counsel is a last resort. You’ll probably get your money after the client receives notice from your attorney that legal action is being considered. If that doesn’t work, going to small claims court may get the client’s attention. These courts stipulate claims for amounts in the thousands of dollars (but under $10K), advising your client that this is your move is powerful.