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Deadbeat Client? Here’s What to Do

Featured image by mohamed Hassan from Pixabay

You have rendered service or sold products to a client in good faith. Now you need to get paid.

The due date on the invoice has long since passed. However, you have not heard from your client. So, you pick up the phone. You have a nice chat with your client and she agrees to pay you within seven days. However, here it is thirty days later and you still have not received payment.

So now what?

Below are some tips you can use to collect from this client. Additionally, here are some suggestions for averting this situation in the future.

RELATED ARTICLE: 6 COMMON INVOICING MISTAKES MADE BY SMB’S

Choose Clients Prudently

Before you agree to deliver goods or services, try to find out more about the person you’re dealing with. Avoid anyone who is vague about what they want from you. Also, stay away from potential clients who seem demanding in their first interactions with you.

Instead, choose to work with clients who appear willing to negotiate and compromise.

However, this may be a difficult policy to enforce, especially during those times when business seems scarce. A feeling of desperation may hook you into working with someone who will waste your time and fail to pay you. It’s during these times that you are most vulnerable to deadbeat clients. That’s when turning down a potential customer might seem like a mistake.

On the other hand, working with people who don’t value what you have to offer and who fail to pay you will cost you both time and money. Therefore, while you’re holding out for the right client to come along, consider taking out a loan to cover your expenses. For example, search for car title loans in Los Angeles if you live in California. This no-pressure loan will put a smile on your face. 

Receive Payments from Clients Upfront

Especially when you’re working with a new client, it can be a good idea to insist on payment before you start working with them.

This may be less necessary when you have worked with a client for years and have established a good working relationship with them. In that case, there is trust on both sides: trust that you will deliver, and trust that he or she will pay.

However, with new customers, insist on getting paid before you deliver products. If your product happens to be a service, you might choose to insist on at least a partial payment from new clients before you begin working on their project.

Charge Interest on Overdue Invoices

Add a statement to the template you use for client invoices that indicates you will charge interest if the invoice is not paid by the due date.

Keep in mind that some states prohibit late-payment interest charges if you haven’t given your clients notice beforehand.

Deliver After You Have Been Paid

Imagine for a moment that you have agreed to work with a client on a work-for-hire basis. This means that after you deliver the project, the entire project becomes the client’s property. You will no longer have any rights to your own work.

However, as the owner of your business, you can decline to deliver your work until the client has paid you. This can include files, services, or other property. This action is legal in most countries.

Of course, in the interest of a pleasant customer relationship, it would be best to include a a statement in your initial contract that expresses your right to this condition. For example, your contract could say that the project will become the property of your client once you have received payment for your services.

Contact the Billing Department

If your client works for a large company, talk with a representative in your customer’s billing department. Once you have reached that person, provide them with information about the situation. Then request the payment be made by a specified date.

If your payment still fails to appear by that date, then contact your client’s managers.

Conclusion

You’re not going to win this battle every time. Some customers just won’t pay, no matter what you do. When you run into such a situation, look to see whether there is something about the delivered goods that failed to meet your client’s expectations. If that’s the case, do what you can to make things right. Your reputation is worth more than any money you might or might not receive.

In the future, resolve to work only with clients who value your time and your work and deal with you honestly, and leave deadbeat clients behind.