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How Should A Business Approach Non-Paying Customers Or Clients?

In many cases, businesses will give a grace period for payment depending on the services they render to customers or clients. Of course, our clients may not be individuals, but also other businesses, and as such we’d expect them to know that those who pay early tend to help the brands they use operate with healthier cash flow.

In some cases, however, customers or clients may be late in payment, or even try to avoid paying altogether. When this happens, it can cause difficulties in your budget. Of course, this isn’t an optional form of reimbursement, this client or customer agreed to your terms of service and quote before even rendering your services, so you’re legally in the clear provided you can prove the work conducted and the agreement curated before this process took place.

Let’s consider how a business should approach clients like this. Hint: usually, communication and reliable messaging can resolve most cases. Without further ado, let’s begin:

Offer Incentives For Payment

Offering incentives can help you avoid more aggressive pursuits. It’s always good to inspire those who can pay to pay as soon as possible. It’s important to make sure this is what you lead with, as opposed to offering a client a reward for paying later. For example, if someone pays within the first week of an invoice being issued, you might offer then a 5% discount on services rendered. Applied to many clients, this could help you keep a relatively healthier cash flow. This way, a client may curate their finances more readily before booking your services, knowing that if they do, the final cost will be cheaper.

Send Friendly Reminders & Then Warnings

Great communication is always key to recovering debts. Be candid about your need for payment. You can start with friendly letters about the deadline for a payment, or reminding them of your discount as discussed above. Then, you can send a friendly reminder that the debt deadline has passed, but you’ll be happy to come to a conclusion if they contact you. Then the tone of the letters or emails can be a little stricter, discussing how your recovery processes might work and how you might be forced to put them in place. At the very least, a document trails shows you’ve been careful and considerate when reaching to your client, which will help you with the next step.

Consider Litigation Proceedings

Unfortunately, not all clients will pay despite them rendering your services. You would think that most would budget for your services in advance, but you never know their motivations. At this point, referring the case to a litigation lawyer so they can escalate the issue is key. Taking your client to court is often a quick and simple process when you have all the evidence on your side, and of course, if they ignore a court summons then the consequences on their part are much larger than anything you could render. Remember – if a client has a consistent difficult in payment, then that could cause you to blacklist them from all of your services from then on.

With this advice, you’re sure to properly handle non-paying clients and customers, as frustrating as they may be to deal with.