Payment Requests: What to Do When a Client Doesnt Pay Up
by Claire Parker, Staples® Contributing Writer
Lets say 30, 60 or 90 days have gone by and your clients payment is still a no-show. Are you stuck holding the bag? Not if you follow this advice on how to make a payment request.
Dont Dally. Rally.
Act early, says Michelle Dunn, a debt collection author and columnist in Plymouth, NH. Call big accounts or an account with large balances 10 days before the invoice is due.
And make sure the fine print, such as your address and the due date, is clear. When the bill is late, send a past due letter. Many people misplace things. They forget or they just need a nudge, says lawyer Mark A. Olson of the law firm Archer Norris in Walnut Creek, CA.
Always hold on to your paperwork. I recommend to clients that they maintain good records, says Andrew Poulos of Poulos Accounting & Consulting outside Atlanta, GA. This comes in handy if payment requests and past due letters are ignored, debts arent collected and you decide to take legal action. (More on that later.)
Make It Personal
Dont underestimate the impact of personal interaction.
I would personally call customers and tell them, We need it, says Curt Finch, CEO of Journyx, a time-tracking and project management software company in Austin, TX. This personal request can be very powerful. If the personal appeal doesnt work the first time, keep it up for a few weeks. If that doesnt pan out, its time to take a different action.
If the client is a continuing and otherwise valuable client, tighten up the terms, Olson says. Shift to collect-on-delivery to show you want to continue business but on different terms because of the delinquency. You also can place a hold on services or products until the outstanding debt is collected.
Get Professional Help
If things get really bad, you can take more decisive action with the help of experienced professionals. This is generally only worthwhile for big-ticket debts, because youre going to have to pay for this assistance. Youre also going to need iron-clad records, otherwise your chances of success are lower and costs may be higher.
You have two common options:
Action Items: How to Ask for Payment
Whenever you have an issue with getting a response to your payment requests, remember these 5 steps to getting resolution.
1. Act early: Head off problems with swift action. Dont hesitate to call before an invoice is due and the moment payment is late.
2. Make a personal appeal: Call, visit or email clients directly to find out why the payment is late and inquire as to when they can settle up.
3. Hold all orders: Cease production or services until the payment is received.
4. Hire professionals: Lawyers, accountants or even your local Small Business Administration office can outline the legal actions you can take to recoup your money or merchandise.
5. Cut and run: If the process drags on too long, step aside and think of the big picture. Its better to accept the loss than to waste time and money chasing a client who wont pay.
These steps go a long way toward helping you get the money youre due. But in the long run, if a client isn't responsive to your payment requests or is unfazed by legal action, move on.
Realize when a client relationship is failing and cut your losses sooner than later, Poulos says. If you continue doing business with the client you will lose more in the long run. Its best to lose a little rather than lose a lot.