How to Deal with Clients Who Don't Pay

Posted by Ryan Howard on Feb 17, 2023 2:57:28 PM

How to Deal with Clients Who Dont Pay

When you agree to do business with another company, the expectation is that you'll provide goods or services, and they'll pay in a timely manner. Providing the goods or services costs your company in overhead, salaries, expenses, and more. So what happens if your client doesn't pay on time or at all? Is there anything you can do to get paid or prevent late payments?

Here's how to deal with clients who don't pay.

 

Preventing the Problem

The first step to dealing with late payments is preventing the problem. Let's look at a few proactive steps to take:

  • Choose the right clients for your business: Whether running credit reports on the clients or simply understanding which clients fit your working style, being choosy will minimize headaches later.

  • Make sure everything is in writing: A written agreement should contain details about what your business will provide when they will pay, and other important B2B contract terms

  • Ask for payment upfront: Some businesses may ask for an initial deposit on project work or payment upfront if they're on a retainer. 

  • Charge late fees: When late fees are clearly marked on the invoices or in the contract, they often prompt on-time payments from clients. 

  • Recognize risky client behavior: If your client is already displaying behavior that seems concerning, such as being non-responsive, it may be time to follow up or escalate their account before it becomes delinquent. 

Dealing with Non-Paying Clients

If you're already facing clients who don't pay on time or at all, then consider the following steps:

  • Always follow up: Don't be afraid to send a friendly reminder notice or demand letter to get their attention. 

  • Keep trying to speak to someone: If they're not responsive to emails or letters, make the effort to speak to someone by phone. 

  • Be prepared to make arrangements: Your client may be avoiding you because they don't have the full balance. 

  • Escalate to third-party collections: A professional debt collections agency that deals with business-to-business accounts receivable and collections will have more tools at its disposal.

  • Consider legal action: Understand what's involved prior to litigation, so your case is worth it and easily proven in your favor.

When you don't have the time or resources to follow up with clients who don't pay, consider the three levels of services offered by Enterprise Recovery, LLC:

  1. Accounts Receivable Clean Up
  2. B2B Debt Collections
  3. Legal Review and Commercial Collection Litigation

HOW MUCH TO HIRE A  THIRD-PARTY COLLECTIONS AGENCY?

Topics: Best Practices, Commercial Debt Collection