What to Do When The Client Refuses to Pay

This is not the norm. Most people are honest and most companies are working in good faith. It’s just that things happen; people and companies fall on hard times. That’s what contracts are for, to protect you in case you don’t see it coming. Here’s what you can do:

1. Remain professional and don’t stress. Most important is to deal with these situations rationally. If you feel angry or emotional, wait until your head is clear before you have any contact with the client. Don’t put anything in writing that could damage your reputation.

2. Stop work. If you are still working on any projects, stop immediately and let the client know you’ll be happy to resume when payment is resolved. This is not a punishment; your paying clients come first.

3. Be squeaky. Call and e-mail every week, even every day. They are likely to pay you just to stop the harassment.

4. Offer other payment options. If you haven’t already, suggest other payment options, such as a credit card (let the bank await payment), PayPal or a bank transfer.

5. Offer a payment plan. Try to get them to agree to pay you by a certain time. A deadline gives you a boundary to work within.

6. Charge late fees. If you haven’t mentioned this up front, you can’t just slap them on as a punishment and expect them to be paid (although sometimes they are). If you really want to charge late fees, it needs to be discussed during negotiations, included in your payment terms and repeated on your invoice.

7. Send a personal letter. Use certified mail to indicate you are serious and state that using your work without payment means they are in violation of copyright, with or without a contract. This hints at the legal ramifications without being threatening and can be just enough to convince them you would be more trouble than you’re worth.

8. Get a letter from your lawyer. If a personal appeal isn’t feasible, have your lawyer write a letter. But keep in mind that a corporate lawyer may be expensive, and you risk eating through whatever’s owed to you quickly.

9. Show up in person.
If they are dodging your calls and e-mail messages, you may have no choice but to show up in the office. The best approach here is to appeal to their humanity, almost forcing them into your shoes. Describe your situation so they can’t help but agree. Say,
“I think you can appreciate the situation I’m in. I understand your predicament but what would you do in my shoes?”
Who’s going to say no to that? That changes the conversation and can be effective with reasonable people.

10. Advise next steps but don’t make empty threats. Let them know you’ll be calling a collections agency (some charge only a minimal fee to recover the funds) and reporting them to the Better Business Bureau. A collections agency will affect their credit, and BBB will affect their community status. You also might be able to file a complaint with your local chamber of commerce.

11. Take them to small-claims court. Almost everyone has an opinion (and a story) about whether taking a client to small-claims court is worth the time and money. Some say it will cost more than the project is worth and you’ll never win; others say it doesn’t cost much (it varies from state to state in the United States) and is worth it, if only on principle. This is a personal decision and should be decided case by case. Jonathan Cleveland tells of taking a client to small-claims court once: “I had a contract, they had a printed brochure. I won very easily.”

Ilise Benun, founder of Marketing Mentor and co-producer of the Creative Freelancer Conference, works with creative freelancers who are serious about building healthy businesses. Sign up for her Quick Tips at www.marketing-mentortips.com.


 

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