Why Aren’t My Clients Paying Me?
When a client falls behind on payments, you need to act quickly before the hole gets deeper. There are a number of reasons clients miss payments, and your first course of action should be to do a bit of legwork to find the cause, then act on a solution.
Here are some common situations in which clients miss payments, and how you can start getting them back on track:
The client is forgetful, or just busy. It’s entirely possible your client had every intention of paying, but has been slammed with various other considerations and your invoice has been shuffled to the bottom of their inbox. It could also be a simple clerical error, the notice was lost in the mail, or their accounting department lost the invoice. Luckily, this is the best-case scenario, as a simple phone call or friendly reminder should get them back on track.
The client is MIA when bills are due. This situation may be all too familiar to many business owners: the client is quick to call you when they need something, but mysteriously vanishes when they owe you money. E-mails go unanswered, or the party responsible for paying is somehow always out of the office whenever you call. Persistence may pay off in this case, and you may even want to have other employees call on your behalf, in case whoever answers the phones is watching out for your name. While phone calls are more direct, make sure you send a few reminders in writing as well, since persistent delinquency on the part of the client may potentially require legal action, and a paper trail will help your case if push comes to shove.
Client has a dispute with the bill. If the client’s expectations don’t match up with the goods and services they received, or they believe the bill is incorrect, they may feel justified in withholding payment until the issue is resolved. Whether you agree with their complaint or not, the ball is in your court to find a resolution. The right course of action varies depending on the services offered and the nature of the client’s grievances, but the important thing is to listen to the complaint and what the client has to say. Subsequently you can opt to make corrections if in error, and possibly offer a discount or recourse. If handled correctly, this will not only lead to potential payment, it could earn increased loyalty from the client in question.
Client is financially unable to pay. This client may acknowledge the bill, but just can’t pay it at the moment. Business may be slow, and cash flow problems mean your invoice and other bills are piling up. In this case, it may be best to set up a payment plan, or similar alternatives, and get them back on track. Getting paid in full is preferable, of course, but if that just isn’t possible, find an arrangement that at least gets you part way there, and keeps you out of cash flow problems of your own. You may also want to limit providing additional products or services on such account, unless payment is received up-front for such new services or products, so that the debt owed to you does not increase and spiral out of control.
Problem customers. In the worst-case scenario, the client has either ignored all attempts to collect, or has acknowledged the debt, maybe even agreed to a payment plan – but still refuses to cooperate. In this case, you will like need to find legal help. Do not wait too long, as the longer you wait, the more difficult it may be to recovery the sums owed to you. In California and many other states, the statute of limitations may preclude a creditor from collecting by way of lawsuit after a certain period of time has passed, or the client may have moved money around to keep such funds and assets out of the grasp of their creditors. Furthermore, you should assume that if the client is not paying you, they might not be paying other creditors as well.
In a perfect world, clients would pay their bills in full immediately, and without dispute or reminders. But when clients fall behind, calling an attorney should be a last resort. Thus, it is always prudent to strive to find the source of the issue and try to resolve the matter amicably if possible.
Please contact Jerry Jen at email@example.com or visit www.jenlawfirm.com if you have any collection / judgment enforcement questions.
(Please note that the above is provided for informational purposes only, and should not be construed as legal advice on any subject matter, nor creates an attorney-client relationship between the Jen Law Firm and the reader. No reader, clients, or otherwise, should act or refrain from acting on the basis of any content included in the article without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the reader’s state).