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Getting your Customers to Pay-Up: Part 2 - Tips for Collecting from Non-Paying Clients

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Getting your Customers to Pay-Up: Part 2 - Tips for Collecting from Non-Paying Clients

By Caron_Beesley, Contributor
Published: March 23, 2010 Updated: November 20, 2011

At some or several points in every business owners life, you can expect to deal with a non-paying or slow-paying customer. In my earlier post - Getting your Customers to Pay-Up - Part 1: Tips for Protecting Yourself from Non-Paying Clients - I outlined some measured approaches that your small business can put in place to protect it from the potential scenario of having to deal with a non-paying client.

But what if, despite these measures, you are confronted with a client that simply won't pay-up on time or at all? Here are some options your small business might consider for collecting or pursuing client debt.

Pursuing Payments - Have a Collections Plan to Fall Back On

We all want to get paid, but no one wants to lose a client - even if you never work with them again, you want to maintain your good reputation. So it's worth putting some thought to a structured and methodical collections plan for your small business. Here are some pointers:

1. The Soft Approach

  • Re-bill overdue bills immediately - As soon as your first bill is past due, re-bill promptly as a gentle reminder. Alternatively send a monthly statement with the amount-owed (with interest) clearly labeled as past due.
  • Know the book keeper and maintain a cordial tone - If a payment is past-due, make a point of seeking out and ask to be connected to Accounts Payable (call the client front desk or operator). Check whether the invoice was received and if you can help in any way. All the while maintain a steady and friendly relationship. Don't hang up until you get a verbal agreement confirming when the payment will be made. Follow-up over e-mail confirming the conversation and maintain a paper trail.
  • Never apologize - Stick to your guns and never apologize for chasing payment or even consider bargaining, no matter how much empathy you feel for a client who is struggling financially or otherwise.

2. The Legal Approach

If your cordial approach has failed and the invoice runs past due more than 60 days, you might want to consider offering a payment plan. Alternate options include working with an attorney to issue a demand payment letter or filing with a small claims court. The latter is a cheaper option since a lawyer need not be involved.

What to Do if your Client Goes Bankrupt

If your client shows signs of going bankrupt, consult an attorney and always file a proof of claim. Warning signs that bankruptcy might be in the cards for your client can include slow payment, lack of communication, adverse industry conditions, etc. Once bankrupt, the debtor has the benefit of an automatic stay immediately upon filing a bankruptcy petition. This stops you from taking any further action to try to collect the debt unless, or until, the bankruptcy court decides to the contrary.

Additional Resources

For more information on debt collection options and the legal and regulatory ramifications read the government's "Plain English Guide to Collecting Debts".

This "Small Business Guide to Managing Finances" also provides tips for accepting cash and checks, accepting credit
and debit cards, as well as extending credit. And this useful article from Inc.com – “*How to Collect from Anyone (Even Enron)” – offers tips for 30 ways to get paid in 30 days!

*Note: Hyperlink directs reader to non-government site.

Message Edited by CaronBeesley on 11-19-2009 08:13 AM

About the Author:

Caron Beesley


Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley


Great series of articles (part one and two). We have had a few of our clients file bankruptcy in the past and it really is a pain. For the clients that have not gone bankrupt, we have adopted policies and procedures, documented them and follow the letter of the procedure every time. It also helps to have a proper contract. Have a lawyer review and revise your contract annually or semi-annually. Always have collection policies in place and follow your written procedures in every contact with a slow/non paying client. Robertg58 All-Tex ExteriorsMessage Edited by NicoleD on 11-30-2009 03:39 PM
Great advice Caron!  It's sad that we as business owners have to deal with slow or non-paying customers and even problem customers.  I just wanted to add that our site Business Beware lets businesses warn each other about problem customers in the same way that the Better Business Bureau lets customers file a complaint against a business.  We also have a service that if your customer has not paid, we can send a letter to them like a collection agency would but we don't charge a %!  Business owners need a break and we want to help anyway we can because we are in the same boat.  Thanks again for sharing this great info with all of us and please visit our site to give us some feedback! (BusinessBeware.biz)
Good advice, this non-payment can be a particular problem when dealing with friends or family; they always put you at the bottom of the list, they think since they know you, you can always wait!


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