As a freelancer and small business owner, you don’t need to deal with a demanding boss on a daily basis. However, that doesn’t mean everyone you work with is pleasant and easy to please. In fact, you may struggle with difficult or downright bad client relationships. Knowing how to deal with different types of bad clients and your options when they don’t pay is essential as a small business owner.
Identifying Bad Client Types
As tempting as it is to sever relations with every client who tries your patience, this strategy doesn’t help you grow your business. Instead, small business owners must learn how to identify tough clients and resolve problems that arise in the most efficient manner possible. Here are some of the most common types of bad clients, along with tips for managing negative reactions.
It’s not only freelancers who need to possess strong communications skills. If your clients can’t get their ideas across, then you have no way of implementing them successfully. Moreover, it’s tough for you to satisfy clients if they’re constantly changing their minds about what they want. With this in mind, poor communicators, including those who are simply wishy-washy about their goals, are among the most difficult clients for you to work with.
To minimize issues, it’s a good idea to agree to a communication strategy upfront. For example, ask if your client prefers to meet in person or be contacted by phone or email. This way, your client can communicate via their preferred format, which should help them feel comfortable with discussions. Sometimes a person might be more eloquent in person, or more descriptive using email.
As a freelancer, strive to speak the clients’ “language.” If your client uses shorthand or other technical terms, ask to clarify those terms to avoid misunderstandings. It’s also a good idea to learn your client’s industry jargon to make communicating with them easier on both of you.
You might love your freelance career, but the odds are good that you wouldn’t work over 40 hours a week if you weren’t getting paid. Unfortunately, many clients try to lowball freelancers. Some clients even request that you do work without compensation. Rather than firing low-paying clients, it’s a good idea to renegotiate with them for more appropriate rates. Start by emailing clients to let them know that you’re increasing your rates, the reason(s) for the increase, and that you would love to continue working with them.
Along with discussing specific terms for services, you should set clear prices for changes and revisions to work, so this type of additional work doesn’t cause issues down the road. Remember that you’re an expert in your field and deserve to be paid accordingly.
From clients who don’t pay on time—or at all—to those who regularly change their minds about what they want, unreliable individuals can take a serious toll on your business. To minimize issues, consider using fixed-price contracts, or even ask for the payment upfront. If clients truly desire your services, they’re okay with paying in advance. If you prefer to bill by the hour and receive payment throughout the course of the job, you can set out the terms of invoicing and payment for work completed up to a certain date.
If your client is notoriously unreliable, ask them to agree to a written contract. Along with stating the products or services you provide, list the payment terms clearly, including due dates. By securing a signed contract before starting work, you can protect yourself legally should the client change their mind about something down the line.
You might also want to consider using an accounting software, such as QuickBooks, to send out your invoices. By emailing professional-quality bills at the same time each month, you let your clients know that they’re dealing with a well-run business.
As a small business owner, you likely have time for one-on-one client interactions. Even the most generous freelancers need to set limits on the amount of time they spend with one person. If your client calls you multiple times a week or demands daily updates, you can rightfully be consider them a high-maintenance client, the kind that threatens to take up too much of your valuable time.
To minimize the burden of attention-hogging clients, it’s a good idea to set clear boundaries. If you don’t answer emails after 6 pm or speak to clients on weekends, state these restrictions up front. You can calm anxious clients by telling them what to expect beforehand. If you offer weekly progress emails or reporting, let them know this from the start. It’s also a good idea to prearrange phone calls or Skype meetings so that clients can gather their thoughts in advance.
Finally, you shouldn’t be afraid to say “no” when a client asks for something above and beyond the call of duty. After all, you can’t provide round-the-clock service to one client without neglecting some of your other paying customers in the process.
Shedding Problematic Clients
In some cases, despite your best efforts, it becomes necessary to sever a relationship with a client. If you have to “fire” a bad client, it’s important to write an email that states your intentions using clear and definitive language. Avoid offering specifics, and simply state that you think the client should find another provider more suited to their needs. The last thing you want is to find out clients are badmouthing you to their colleagues—your potential customers—in the industry!
Deciding to Take a Client to Court
You invoiced for your work and sent statements. You followed up with emails and phone calls. At this point, it’s clear that your customer has no intention of paying you what they owe you. So what now?
You can consider the option of suing your client (likely in small claims court) for nonpayment of fees — but is it worth it? Before you take action, it’s beneficial to consider the following information carefully.
Small Claims Court Basics
As far as legal remedies go, small claims court is an inexpensive and relatively quick option. You don’t need a lawyer to represent you, and the judge makes a decision within a few days of the trial. Small claims court is specifically designed for smaller-ticket disputes. The most you can sue for is $25,000 or less excluding interest and costs.
Can You Sue Your Former Client?
You can sue either individuals or businesses using small claims court. You need to write a short, clear summarization of the events that occurred leading up to the filing of the Plaintiff’s Claim. You also gather and make available the documentation needed to support your claim.
Even if you only had a verbal agreement or contract, you can still utilize small claims court. The verbal agreement creates more difficulty in proving your case. And remember, there’s a time limit for filing. In most cases, the limit is two years since the incident.
Is It Worth the Time and Energy?
Small claims court isn’t expensive to pursue, but it takes time away from revenue-producing activities. To begin the action, you must file paperwork with the court clerk and wait for a hearing date.
Before the court date, you need to gather and organize all the documentation that supports your case, such as contracts, canceled checks, and emails, to present to the judge as proof of your claim. The judge asks you to explain your side, so prepare what you want to say beforehand to alleviate a case of nerves that could lead to missed essential information.
Aside from the value of your time, there’s a mental cost to pay. Working on your case constantly reminds you of the anger and frustration the client caused you, which can cause you to experience those feelings again.
Do You Have a Winnable Case?
To succeed in small claims court, you need evidence of a breach of contract. If your contract is vague, confusing or not in writing, it’s more difficult to prove a broken contract. You’re also responsible for proving that you completed and provided the work required of you under the terms of the contract. If the defendant felt that your work was substandard or that you delivered the product late, it’s harder to win.
Can You Collect?
Just because a small claims court issues a judgment in your favor doesn’t mean that you receive a payment. The responsibility for collecting the judgment falls to you; the court doesn’t do it for you. If the defendant doesn’t pay, you can contact an enforcement agency and request a wage garnishment or the seizure of the defendant’s assets.
What Are the Benefits for Your Business?
Taking a deadbeat client to small claims court empowers you, and you’re well within your rights to do it. It’s a good idea to consider the effect it might have on your business. Perhaps taking your client to small claims court shows other clients that they can’t push you around.
It’s also possible that the client you sue ends up bad-mouthing you and harming your reputation. Even if you were in the right, other folks get a skewed version of the facts. Potential clients may be hesitant to work with you knowing that you have a sued a previous client, even if you were within your rights to do it.
As a small business owner, it’s up to you to take make the best decisions that you can for your company. Tracking invoices and payments is easier with online invoicing software. QuickBooks Self-Employed app helps you as a freelancer, contractor, or sole proprietor track and manage your business on the go. Download the app today.