There are several types of non-paying clients:
a) The well-intentioned non-payers, who have a reasonable explanation for not paying on time. Try to work with your client and suggest a payment plan over a couple of months, which will allow you and your client to maintain cash flow. If they agree to this arrangement put it in writing.
b) The unhappy non-payers are a trickier prospect. Take a step back and look at their complaint to see if there was some fault or error on your part. If the deadline was missed, the invoice is higher than the quote or the project was substandard (for whatever reason) – then apologize sincerely and offer a discount. However, if your work was completed and priced as agreed then try to mitigate with your client for a mutually acceptable resolution.
c) The serial non-payer is to be avoided at all costs but when projects are scarce we may fall prey to them. There are websites available to you, such as Client Scorecard, which will give you a better insight into a new client who doesn’t ring true for whatever reason. A little research can save you a lot of stress.
d) Large corporate clients will typically put you on the bottom rung for payment. To counter this negotiate payment terms prior to beginning work for them and have it in writing. You should have a payment policy within your contract, stating net days required, a late fee (typically 1.5% interest), and dispute resolution terms.
Remember to send your invoices out promptly and track them so you can follow up. The initial contact for requesting payment should be pleasant and friendly and tie them down to a date. If the payment is not received after the promised date, call and ask politely if the payment was made. If the payment has been delayed or forgotten, request a new date and state you will contact them on that date to check. Any longer delays require diplomacy and tact but also making it clear you require payment without fail otherwise you will have to engage a collection service. Make it clear you will work with your client in order to keep your business relationship.
However, there will be clients that will not pay and then you need to contact your lawyer, who will send a letter on your behalf. Another option is to send a Final Notice stating a collection agency will be actioned if no payment is received in a specified time. These options may lose you the client but without payment your time and effort is wasted.
Do you have any tips on ensuring payment?