Have a client that won’t pay up? You’re not alone. Every business will face a situation in which a client refuses to pay, doesn’t pay on time, or doesn’t have the funds to pay for services rendered. While frustrating, it’s important to act appropriately when trying to recover owed money.
Your response will not only affect your chances of collecting the debt, but also affect your brand image. You can’t take a cookie-cutter approach to every incident either. If a long-time client who always paid on time is going through financial difficulties, you shouldn’t treat them the same way you would treat a brand new client who has yet to pay you for your services.
Use these six tips to get clients to pay up.
1. Know Your Rights
Educate yourself. Learn more about your rights and legal options when it comes to debt collection. Unless you have training in this field, there’s a good chance you’re going about this blindly. That could wind up getting you into legal trouble down the road.
Sending a collection notice through email, for example, isn’t good enough. Written communication must also be sent.
“Among the many requirements is that creditors must send written notices to consumers within five days of an electronic communication if they do not have a validation notice that the email has been received and read,” says . “This helps ensure that consumers receive the communications required by law.”
The more you know about your legal options, the better off you will be.
2. Keep Your Cool
The thought of a client owing you money may make your blood boil, especially if that client is just trying to get away with taking your services for free. You have a right to be upset, but it’s important to .
The angrier you are, the less likely you are to collect your debt. Sending threatening or rude letters to the client will only make them more uncooperative.
Attitudes are contagious. If you take a positive approach, you’re more likely to get a positive response.
3. Document Everything
If you’ve been sending the client invoices and payment reminders, keep copies of these documents. Also, keep copies of all communications with the client (email and regular mail) and record telephone conversations. Keep logs of any visits you make to the client’s office or house.
If you wind up in a legal battle with the client in the future, you will have the documentation to support your argument.
4. Negotiate a Lower Settlement
If the client truly doesn’t have the money to pay for your services and won’t likely have the money any time soon, you might consider settling for a lower payment.
Walking away with something is better than walking away with nothing.
Don’t negotiate a lower settlement right away. Use this is a last resort to recoup some of what you’re owed.
5. Don’t Harass the Client
Harassing the client will get you nowhere. Should you be persistent? Yes, but persistence does not mean calling the client several times a day or using threatening language when communicating.
Instead of calling every morning, call once every seven to ten days and – using a calm tone – discuss some options to get the debt paid.
Under this law, harassment can be defined as:
- Using obscene or profane language
- Repetitious phone calls intended to harass or abuse the debtor
- Calling and not informing the debtor who you are
- Threatening violence or harm
- Publishing lists of people who refuse to pay their debts
6. Use a Collection Agency as a Last Resort
If you have several clients who owe you money and you’re spending a great deal of time trying to recover the debt, you might consider hiring a debt collection agency. An agency will save you time and may be more effective at collecting the debt. It could also keep you out of legal trouble.
A registered and reputable debt collection agency will understand the complexities of the FDCPA, so you can avoid putting yourself in a compromising position.