The Do's and Don'ts of Dealing with Deadbeat Clients
Do you typically bill clients and receive payment only after completing projects? If so, you may sometimes find yourself waiting for checks long past their due dates. How do you deal with the deadbeats? Here are some do’s and don’ts of getting paid what you’re owed.
Do check in with the client regularly to ask for an update, clearly restating your terms — and indicating that the payment is overdue. Provide payment options: If a check is taking too long, offer to let the client pay cash online via PayPal (including PayPal’s commission fee, if you’re so inclined). If a client is unresponsive and works for a larger firm, contact a supervisor or the company’s owner.
Don’t get hostile or make personal attacks. Remember that you’re representing yourself as a business owner. A client can very easily damage your brand by, say, sharing your curse-laden emails or voice mails with others or taking his case to Yelp.
Do keep records of all your correspondence with the client. Communicate via email as much as possible to preserve a paper trail; if you talk on the phone, inform the client that you are recording the call (using an app like Google Voice for smartphones). If you’re unable to record the conversation, take notes during it or write down what was said immediately after you hang up. Even if you don’t have a formal contract for the work you’ve done, make sure to save any emails that include details about your agreement; these can serve as evidence of a contract in a court of law.
Don’t publicly bad-mouth the client. Smearing the client’s name will guarantee that you’ll never get any work from that company again — and may make you look unprofessional to other colleagues and clients.
Do take advantage of third-party services when a client refuses to pay after repeated reminders. If the debt is more than about $1,000, consider hiring a lawyer to draft a demand letter to the client — the mere threat of a lawsuit is often enough to scare people into paying what they owe, so it’s likely worth the $100 to $200 in legal fees involved. For smaller bills, it may be easier to turn the debt over to a collection agency: You’ll pay a commission (around 25% is customary) on the amount collected, but you won’t waste any more valuable time fighting with the client.
Kathryn Hawkins is a business writer for Intuit and is passionate about solving small business problems.