Deadbeat Client? Get Them to Pay Up
By Tannette Johnson-Elie
Just about every small business owner or independent contractor will deal with a deadbeat client at one time or another. How can you get them to pay you?
It’s a scenario that’s all too familiar: You’ve put in your good faith effort to complete a project on time, but when you invoice the customer for said payment, you find it difficult to collect payment. It’s one of the toughest issues faced by many small business owners, entrepreneurs and freelancers: getting paid for work.
Since joining the ranks of freelance journalists in 2009 after years of working for a major daily newspaper, I’ve encountered a few deadbeat clients, including one customer who has owed me money for nearly a year. I can tell you that not getting paid sucks.
Dealing with deadbeat clients is perhaps the hardest part of doing business, especially when sales and profits are down for many small businesses due to a weak economy.
It’s a job that few of us enjoy, but since the government certainly isn’t going to go after your debtors for you, it’s up to you to handle your own collections for the health of your business.
The good news is you can minimize late payments and the time you spend collecting debts, with a little planning and communication and by working with cash-strapped customers until they get through a crisis or slow business cycle. In the process, you might even win some devoted customers.
The first rule that usually applies in debt collections is this: The sooner you go after your money, the better your chances of getting paid.
Here are some additional tips for how to get deadbeat clients to pay you:
Follow up by note: You can start by sending a friendly note attached to a copy of the invoice to encourage payment.Pick up the phone: If your patience is running thin, call clients to make sure they have the invoice with the correct address to send payment and find out exactly when payment is scheduled to be made.
Be persistent: Don’t be squeamish about getting your money. I made this mistake last year after a company failed to pay me the full amount for a writing project. I just didn’t have the heart to fight. When it comes to collecting debt, people who follow up on late payments ultimately are the ones who get paid. They key is never lose your temper.
Be professional, yet firm: Become more demanding: If you feel a simple note isn’t getting results, send a collection letter along with the invoice via email or snail mail, explicitly requesting payment. You might have to send routine collection letters to prod clients to put the check in the mail.
Turn to a collection agency: If dealing with a deadbeat client is too much for you, turn the matter over to a collection agency, but only expect to receive 50% of what the agency recovers. Half is better than nothing, especially in these lean times.
One other last resort is to take them to small claims court, but keep in mind that depending on the debt owed; it could be too much hassle and expense.
Dealing with deadbeat clients is a dirty job that nobody enjoys; I equate it to cleaning the bathroom toilet. It’s awful but it’s necessary in order to keep cash flowing, which is vital for any business, especially for us little guys in these tough economic times.