For a small business owner or independent contractor, your business depends on your reputation and the client’s ability to pay you, but if the client refuses to pay you, it often can leave you frustrated and feeling helpless, which is a common problem many business owners face.
If this is a problem that you or your business typically runs into, there are plenty of steps you can take to ensure you’re paid in full. If you’re a freelancer or small business owner, you deserve to be paid for your services. Here are some steps to take if the client refuses to pay you for your services.
Cement a Contract
Not just a template you find online, but an airtight contract drafted by someone with working law knowledge or experience in small business coaching.
You not only want to make the contract clear, but strict. If you operate a business that specializes in deliverables, you want to ensure you create a contract that budgets time for phone calls, meetings, and — perhaps most importantly — revisions. You don’t want to be locked in a contract that appears simple, but eats up your time because the client thinks they’re your only client (or wants you to think that).
Make a contract that specifies fees and charges. Don’t be afraid to be verbose and strict. If they’re a big client, they’ll have their lawyers look it over and propose revisions if they want them. Otherwise, think of the terms and agreements to websites and apps. You don’t read them because you want the service.
Charge Late Fees
A majority of businesses will charge a late fee for unpaid services, which may include a $30 fee or percentages. You should draw up a carefully outlined plan in advance or create a clause within the contract, which informs the client ahead of time of the repercussions.
References and Other Contact Methods
In order to secure your payment, good communication is vital, which includes calling, texting, and emailing. Before you take on a client, you should secure a secondary phone number, business phone number, personal reference, and/or email address, which will make communication a lot easier.
If you’re at the stage where they are still refusing to pay, then the same rule applies to them as well. For starters, call and email them multiple times regarding payment.
When a client hasn’t paid you, you should try to figure out why they decided to not pay for your services. Were they dissatisfied with the work or was there a problem with their method of payment. For instance, if they’ve mailed the check, it may have been lost in the mail.
If you’re having trouble reaching the client, you should call and email them the day after the payment is due. Even then, continue sending them their invoices.
Send them multiple invoices until you get a response. By sending an invoice directly after the payment is due will notify the client of your intentions, which includes emailing or physically mailing the invoice.
Depending on your situation, it may be in their best interest to work out a payment plan. This will help you obtain your payment and maintain a good relationship with the client, which is better than not being paid at all.
Of course, if the client refuses to return your phone calls and refuse to pay you, consult legal representation. If the client is more than 30 days late, you should contact a business attorney or seek legal representation.
Finally, if you want to receive your payment in full, you could file a court claim, which will help you recover your payment or any lost wages. By filing a complaint in small claims court will allow you to recover up to $10,000, which doesn’t require an attorney or legal representation.
The alternative to that is consulting with a debt collection agency, which is often a more effective than filing a claim. The debt collector will then get in contact with the client by phone or will physically mail them reminders until the amount is paid in full.