When Clients Don't Pay Their Bills

I've always heard horror stories of small business owners and clients who don't pay their bills. Stories of owners laying out thousands or tens of thousands of dollars in products or services and then being unable to get a client to pay for it.

Sometimes the client's business takes a nosedive or goes bankrupt. But what happens when the client just refuses to pay? They stall, asking for additional copies of the contract, or invoices, or they need to talk to accounts payable. Then they just stop returning your calls.

Obviously, I'm not writing this in a vacuum. I should count myself lucky that no one in the nearly 10 years we've been in business has ever stiffed me for more than pocket change, but it still stings when it happens.

I'm wondering if anyone out there wants to share some similar horror stories (no client names please!), or if you have some clever ways of guilting delinquent clients into paying I'm all ears.

Rich Brooks
Stiffed

Comments

[Susan Martin]

I don't have any clever strategies, but the trick is not to let up. If they're not paying you, they're probably not paying others too. If you stop bothering them, they'll pay others who don't. (squeeky wheel theory) If they're local stop by their offices during business hours and demand to speak with them.

If you've tried all this and it hasn't worked, bite the bullet, send them a certified return receipt letter telling them if it's not paid in full within 5 days you will put them in for collection, report them to credit reporting agencies, etc. If the amount is large, you may even consider suing them. Collection agencies do take a big cut, but if they're good and do the job it's money you may never see otherwise.

[Katie Baird]

Ouch. This brings back a bad memory.

The clients were in a rush, but they seemed to fit the profile of my ideal prospect. I hadn't been in business all that long and I was only too happy to put their very important project on my front burner.

Hoping to score some points with my timeliness, I was unconcerned when their promised deposit did not arrive when they said it would, and I worked through the weekend trying to get the project done for them. I sensed their urgency but simply attributed it to the fact that they were a successful and well positioned firm.

Naturally, there were numerous change requests and difficulties catching up with them as they were in meetings all the time and couldn't/wouldn't return my calls. They changed directions several times in terms of the project scope and, ultimately didn't pay for any of the work I did.

I tried for several years to get them to pay. Having exhausted every resource I turned up, I finally filed their past-due invoice and other documentation. Unfortunately, when I saw that paperwork in my receivables files every month, I got enraged all over again.

I learned a lot from the experience, and what I did learn has definitely saved me from having a repeat experience. In fact, what they owed me is a drop in the bucket compared with the cost effective business practices I implemented as a result, and what I have earned since.

I think I'll just shred that past due invoice today and move on.

Thanks for inspiring me to reflect on this incident once more, and for the subsequent insight I have gained from doing so.

[The Gritty Virtual Assistant]

My comments have more to do with prevention. Have solid contracts drawn up by an attorney (don't rely on the generic forms you get at OfficeDepot--those will NOT protect your interests and are full of holes) that include provisions about what happens when payments are not made and other contractual obligations are not met (all work ceases; fees and interest applied; lien clause stating all client property will be held until all obligations are met, etc.). Also, look at your payment policies. Don't let clients get that much into the hole with you. Require deposits upfront (at least 50%) or even full payment in advance depending on the project. Require expense retainers upfront. Bill in increments after that so that you don't expend valuable business resources without payment along the way (if you don't, you run the risk of having wasted all that billable time on net getting paid).

[Brian]

my client stung me for 3500.00 bucks in transportation costs. to add insult to this he started up a new business (same product) and just walked away from the old company.

when I told him I will see him in court he told me "that will never happen"

I checked that statement out, he is right, he can drag this on to infinity.

what do you think, sign off to a collections agency???

here is a snapshop -

He was President of a company
he claims he was really not the real owner, and referred me to the supposed owner (he took a few calls but said he has no money)

any advice is appreciated, I really cant afford to lose that much money.

[nomad-one]

Just battling 2 clients to get my money. I'd tried getting hold of one of them for ages, and received a few promises and many excuses, then I threatened him with legal action and to name and shame him in my network.

he mailed me back in a few mins sayign he'd pay in a few days, so now I need to wait out those few days.

the other Client I threatened to take down the site i had put up for them, apparently the problem is I have an attitude problem for expecting payment by the time it was promised.

Haven't found the secret weapon to get payment. i think the threat of legal action is probably the best. If you can get a lawyers letter through to them that would help.

Contracts are crucial. Good luck to all of u in getting your hard earned bucks.

[accountinghomework help]

Thanks for inspiring me to reflect on this incident once more, so now I need to wait out those few days.