Blog Details

While doing business there isn’t surely, a dearth of experiences that are difficult for the owner and the business. Examples of such experiences may be encounters with clients who will happily take advantage of every benefit you have to offer them, but when it comes time to pay up, they’ll refuse to do so.

If you are not sure of the seriousness of this matter, we hope you are aware of what happened with Stayzilla's founder. A company actually sued the founder under criminal charges referring to the non-payment for services. The founder had to spend 25 unfortunate days in the jail, which is outright terrible. We hope such things are avoided by both the client and the service provider.

It’s difficult to come to terms with the fact that something as simple as getting paid could be such a pervasive issue. Unfortunately, that’s the reality and it is exceedingly annoying and frustrating. The psyche of the clients (the reason for such unethical betrayals), which ultimately sheds light on their hypocrisy, is absolutely capable of making one’s head spin.

Pondering upon the question that why do clients, repeatedly and aggressively, rip off the small business owners of the world, drives one to conclusions like, that clients think they can get away with such betrayals and, other that they DO get away with it. And the way to fight with is to make yourself stronger to not allow the client to take the advantages of loopholes.

Here are certain recommendations on how to get all your bills cleared:

Standardization is the key

Make a point to standardize your business practices and to draw up a contract for every job, every client, and every time. A contract comprehensive enough to include a description of the work, payment information, and payment schedule. This will also help clients feel comfortable that you will uphold your end of the deal, as “dead beating” can go both ways.

Decide how to accept payment- many professionals suggest taking a down-payment before the start of any project and collecting the balance upon completion, before turning over any goods or services to your client.

Create a sense of mutual empathy

When an account has become seriously delinquent the first thing to be done is to let the customer know that you know how easy it is to run into trouble as a small business and offer a payment plan. And let them know how their delinquent balance affects your business and remind them that like them, you also rely on the cash flow.

Reach out to the customers emotionally. Connecting with them empathetically allows you to recover money, which you might lose to the client who has made up his mind, to not to clear your dues. Staying empathetic to customers is vital. However, the loyalty of the customer and his credibility should decide the level of empathy that the customer deserves. An old customer definitely deserves a more empathetic and understanding outlook of yours. Do not underestimate the power of ‘discounting and settling-down of the bills' tactics. Use these tools.

Follow-up is a must

If your invoice hasn’t been paid by the agreed-upon deadline, don’t hesitate to send an email. Keep it friendly but firm. If there’s no response from there, don’t be afraid to change your tone. No matter how frustrated you might be, it’s important to keep your tone professional and laser-focused on finding a solution to the issue as soon as possible. Thus here, the art of follow-up and bearing with the stubborn clients becomes a pre-requisite, something which you should pursue confidently.

Initiate an immediate action

Bill your clients on time and address non-payment immediately. Send a late payment notice notifying them of the date you will follow up with legal action. After following up on your own, there are a few things that can be done before resorting to small claims court:

• Have a business lawyer send your client a letter.
• Hire a collection agency to make calls and send letters. Collection agencies will generally pay you 50% of what they collect. Offer a discounted payment as a one-time-only offer. Write it, put a strict deadline on it, and be extra clear with them that this offer is only happening once. If they accept, be sure to formalize the deal with a legal agreement called a mutual release and settlement.

Make sure recovery of your money shouldn’t be a losing streak instead of profitable one. Resolve your issue in small claims court, but don’t lose more than you’re owed.

Small claims court is a venue for resolving generally small disputes over money and other issues. Usually, it’s not costly, but before beginning the process, be sure that the money spent makes sense for what you’re looking to recover. The specifics of whether you can represent yourself, how much you can recover, and how long you have to bring a lawsuit will depend on your location.

Know your rights and be legally prepared

You don’t need to have a lawyer on retainer, but you should have a referral on hand in case you ever need one. Familiarize yourself with lawyers who specialize in business organization or contracts. Local lawyers will be particularly helpful, as your rights in court or with collections will vary by jurisdiction.

Consider judicial remedy as a last resort. Don’t let more uncertainties and contingencies creep in, but in unavoidable circumstances also don’t shy away from taking this step.

Join a professional organization for your trade

You are not alone, so take advantage of the collective knowledge of your fellow professionals. Your group might even have access to legal staff.

These were some sure-shot ways to let you complete the customary ritual of many businesses, of dealing with derelicts and fighting contingencies related to them, in a much prepared and professionally organized way.