What to do about clients not paying?
Is there anything more frustrating than doing work, only to not get paid for it as promised? Even if your clients do pay but they pay you late that is still an issue. Cash flow is the life blood of any business. You need your clients to pay you so you can pass on the buck and pay your own expenses. When you aren’t paid on time the delicate chain of work and pay gets interrupted.
Getting paid on time needn’t be left to the whims of your clients. You can either prevent this awkward situation from happening, or use one of several methods to get what you are due if not getting paid on time is already a problem.
Preventing late payments
Prevention is the best cure, is it not? There are a few ways you can avoid having to deal with this frustrating situation altogether:
- Always run a credit check on new clients and customers if they are not going to pay for work upfront. Remember that if you are letting them pay later, you are essentially extending credit. A bank wouldn’t give you a credit card without first running a credit check, and you should do the same.
- If your clients have to pay you the same amount every month, you can prevent unpaids by using debit order collections. A debit order collection agency, acting as a third party, “collects” the amount owing to you directly from your customers’ bank account (with their permission) and then deposits the money into your account. The process is automatic and consistent, thus minimising the chance of going unpaid.
If you already have a problem
If you are already dealing with late payments, use one or more of these techniques, while preventing the same thing from happening again in the future
- Ask the client directly about the issue. Perhaps it is just a misunderstanding or a case of forgetfulness – nothing a gentle email reminder can’t handle. Perhaps there is a bigger issue at play though and a phone call is in order. Whatever the holdup is, communicate directly with your client before taking further action.
- Recognise when you need to settle. If a client is going through financial struggles, you could be one in a long list of creditors waiting to get paid. In that case, settling could be the difference between receiving at least something or nothing at all.
- A more serious route to take involves something called ‘debt factoring’. If you have serious problems with collecting your debt, you can sell your invoices to a third party, who will then give you the money owed to you – for a fee of course. They will then be responsible for collecting the debts themselves.
If all else fails you can take legal action. However, bear in mind that this can be frustrating and expensive and not even a guarantee so it really should be your last resort. The best is to prevent this kind of thing from happening at all, but otherwise take a gentle but firm approach. If getting paid is a consistent problem with certain clients, you are better off cutting them loose.