At some point or another, most business owners come across a client who refuses to pay for work or services that have been provided. Regardless of how much the bill is for, when a client refuses to pay, it’s only natural to feel anxious and concerned.
If the project has been completed or the services already installed, you may think that the client has the power, but this isn’t true. Although you probably won’t be able to make the client pay by simply demanding it, you do have other options.
If a client has refused to pay for services or work, here’s what you need to do:
Okay, so sending a reminder may not seem like it’s going to do much, but you never know. In some cases, sending reminders does pay off.
Send a bill each week that states the client’s account is overdue and needs to be paid immediately. If after six weeks, the bill still hasn’t been paid, continue to send letters and call every week to remind the client that they need to pay up.
Before sending out any letters or making phone calls, consult Mark Reynolds Solicitors, to ensure you are staying on the right side of the law. The laws regarding debt collection vary from place to place, so it is important to ensure you are staying within the law. Otherwise, it could be you who ends up in trouble.
Find out why they won’t pay
If your letters and phone calls fall on deaf eyes, try to find out why your client is refusing to pay. Are they experiencing financial problems? Were they unhappy with the service or product? What is it that’s stopping them from paying?
Make an appointment to speak with the owner of the company and see whether you can resolve the issue between you. If the client is refusing to pay because they were not happy with the product or service, consider offering money off their bill or a coupon for the next time they use your company.
Get a debt collection agency involved
If all else fails, the next step to recovering your money is getting a debt collection agency involved. Before doing this, make sure to discuss it with your solicitor beforehand.
Once a debt collection agency is involved, most companies will be more willing to pay, as they don’t want the debt to affect their credit score. Make sure that you choose a reputable debt collection agency and never make threats to the client, as this is against the law.
Go to small claims court
If the client still refuses to pay, as a last resort you can take them to small claims court. While taking the client to court can be costly, if they owe you a large sum of money, it is most definitely worth it.
You may find that after receiving a letter from the court, the client will pay up. Most companies don’t want to be taken to court and will do anything to avoid it.
If the case does go to court, make sure you have a specialist lawyer with you. Legally, you can represent yourself in court. However, you have a much better chance of winning the case if you have a lawyer present.
Fortunately, most clients pay their bills on time. But, if you are ever in a situation where a client is refusing to pay, make sure to follow this advice.