Getting paid on time, no matter what type of business you operate, is imperative if you want to pay your own bills on time. When clients are late with payments or they refuse to pay altogether, it can cause your business to fail. Therefore, it’s vitally important to have a strong accounting team so you can keep track of accounts receivables and get the money you deserve.
But how do you deal with business clients who aren’t paying their bills like they should? Continue reading for a few tips.
Establish Payment Terms in Writing
In the event a client doesn’t pay and you want to hire a lawyer to help you get the money, it will be nearly impossible to make a case if you don’t have the payment terms in writing. Therefore, whenever you create a contract with a client or submit an invoice, make sure the payment terms are clearly stated, whether you want to get paid in two weeks or in a month. This is the first step you can take to hold a client accountable.
Stop Working for the Client
If you do consistent work for the client who isn’t paying what they owe you, stop doing any future projects for them. If you were to continue working for them, the debt would only increase and you’d continue losing money in the process.
Let the client know that you won’t be performing any more work for them until their previous invoices have been paid. If they value what you do, they’ll make an effort to pay up.
Negotiate with the Client
To get at least a partial amount of the money that’s owed to you, consider negotiating with the client. Perhaps the client is having trouble paying bills, so a longer term deadline would work, or perhaps smaller payments made over time would suffice.
Hire a Collections Expert
A collections company can make the consistent phone calls necessary to contact your clients and ask them to make payments, even if they’re smaller payments over time.
Although you’ll need to pay the collections agency a percentage of the money they’re able to get you, or a flat fee for their services, this is definitely the way to go if you don’t have someone in-house who can get the job done.
The same holds true if you’ve already won a case but the client still isn’t paying what they owe you. Hiring a local judgement collection agency, such as a Los Angeles collector, could be the ideal solution to your problem.
Head to Small Claims Court
If you’ve tried every other tactic to get money from your client but you’ve been unsuccessful, you can take them to small claims court in the hopes of having a judge decide that payment needs to be made to you.
While small claims court cases are generally really affordable, you still need to weigh the costs of going to court with the amount of money that you would get from it. If it’s worthwhile, go for it, as this is probably your last resort.