Any suggestions for how to get a client to finish paying what they owe me?

Question

I do work for several small firms. I have a small firm that tends to pay slowly (I am supposed to be paid in 10 days but for them it's usually 30), but I've always been paid over several years. I do good work.

Two months ago I sent them a large invoice (about double the usual) because of doing a lot of work in a short time. After 53 days and about 4 reminders by email and phone, they finally paid me only 1/ 2 that invoice, saying they were waiting on some payments themselves. This never happened with them before.

They still owe me1/2 of that invoice plus two later invoices.

Having received a half payment a week ago, I don't even know how to start this conversation about payment with them again. At least they haven't asked me to do any more work in the meantime. They owe me several thousand.

Any ideas? Should I just give wait and give them some space, or what can I say or do or try get paid again before too much longer? Thanks for any help.

Thank you all for the wealth of good suggestions. I got something valuable from EVERY answer, for now or the future.

I'm not ready to sue this client yet or send them to collection. There will be plenty of time for that. I'd like to keep the client if I can..

I sat tight for a week while reading your suggestions. Yesterday the client called and asked me to do a small project. I said I could, but asked about getting paid for the prior work. The client offered to pay me in advance for the newl project and said he'll start getting the balance paid off. A check for the new project (and for some prior work) should arrive today.

I'm glad the client still needs my talents enough to find a way to pay for them. I'm going to keep asking for advance or partial payments until the balance is brought current..

I plan to raise my rates for this client in January and allow larger discounts for prompt payment, as a roundabout way of charging interest for late payment.

Thank you all.

One other note -- I am aware that this client is not ideal due to the long-standing pattern of slow payment and the recent nonpayment. I believe I need to do more marketing and work towards doing more work for past and future clients who do pay promptly.

Answer 1

When I had my business, I would offer an incentive. 7% off invoice if paid in 10 days 5% off if paid in 15 days.

If you do regular work with them... consider a retainer fee paid biweekly with a 30 or 45 billing for work that exceeds the retainer.

The other option that I used was a one third, one third and final third option of payment. Begin work with a third. Get one third on approvals with the final third paid in 30 days.

If this is a good client, you might consider these options. If they are not a good client to keep because of slow pay, you might want to pass over their work for other clients that will meet your terms. You might take a hit financially but in the long run it keeps you from being the heavy and trying to collect. Cash flow can be a tough thing. Some of this may or may not work for you. My business was a graphic design studio. I had some clients that took six months to pay. Ugh! Some never paid.

One last thing. Take the owner and or controller out for lunch or coffee, ask if there is anything you can do to make this work for the both of you. Be candid and upfront about your concerns. Be sympathetic toward their cash flow concerns. See if you can reach an agreement without the email and phone reminders.

BTW, collection agencies take a bigger chunk out of the receivables due than the discounts I suggested, and the relationship with your client will more likely end.

Answer 2

Send them to a collection agency and add the fee to what they owe. You should start having your clients sign a contract, if you don't already, and outline that there will be an additional charge for late payments and if they continue to be late, you will drop them as a client. Stop doing work for them if they are not paying you. They are using you and getting free service. You can also start a small claims suit against them. First, send them the past due invoices and a letter stating that if payment is not received within 10 business days from the date of the letter you are proceeding with a law suit. Send it certified that way they can sign for it or reject it and the court will know you made an attempt. Then if they don't respond proceed with the case. Check your local county website for the form you will need. If they live in another county, you will have to file the case in that county. You can always add the filing to what they owe. GOOD LUCK! Post an update on how it goes.

Answer 3

Learn from this. I'm not sure what type of business you run, but next time- for all clients- require half up front, and as the project progresses require additional payments. Don't deliver the final product until it is paid in full! If this client doesn't pay make a very firm telephone call. Get them a date to send the payment, and let them know if it is not received you intend to take them to court and make them pay court cost. Explain that you hope this can be resolved with going to court because you appreciate their business, but at the same time you have a business to run. If they don't comply-take them to court. If you need help and have these problems often consider hiring a virtual assistant to handle it. Check out www.dreameedesign.com. They offer more than design services. They can assist with this file the paper make the phone calls etc...- and they will get you your money-trust me. I've used there services many times.

Answer 4

You did the work, just call them up and say "Hey, I really need to get paid for the work I did." And verbally find out from them what the delay is. Whatever answers you get from them, follow it up with a letter stating "This is what we discussed, this is what we decided was the solution, and I expect you to follow through within 'specified period of time' that was discussed, and if it does not happen, I will have to take further action" and make it friendly but professional. Then after the specified time, if you are still not paid in full, take further action: whether it be a collection agency (remember they take 15-35% of whatever they collect!!!) or a lawyer or whatever is required in your state for collections. (this information can be found at your area's government website or through your local municipality offices)

I always try to discuss it with my client first though, because if they are a good client that you want to keep, getting nasty right away can lose you potential future clients.

Answer 5

My sisters company ran into this problem before. Luckily she has a friend that is a lawyer, said lawyer sent a letter detailing what work was done and what they had already paid and what that covered. Also in the letter where dates of all phone calls when recovery was attempted, who was spoken to and all of that. The main part was if you don't pay i will take you to court, and since it was plain to see from the invoices(evidence)they promptly paid up. I you don't have access to a lawyer to help you i would say write a letter to the owner describing and just say in a very nice way, you owe me money and it isn't professional not to pay me, and that you don't want to take legal action but you will if you have to.

Answer 6

I would be leary of any further projects from them. I would talk with them to remind them your services are Net 10 days not Net 30.

Maybe change their terms to 50% pre-pay at the time of the project and 50% net 10 after completion and say that their company will be removed from the 50% down once they have 6 months of paying their invoices on time.

You may consider also, raising you fees if they insist on Net 30 days.

Answer 7

As a businessman you should: 1. Do verbal negotiation for the payment. and to no avail. 2. send the statement of account to your client as a reminder for the unpaid balance. After 7 days without action, send another with the same statement with specific date to act upon it. If the second letter fails, I suggest file a case against them.

Answer 8

My parents own a business and they hired a collection agency to collect money from deliquent bill payers. Mostly it involves people who have written bad checks. I have no idea how much it would cost you to hire a company like that, but it might be looking into.

If it is a small amount, you could take them to small claims court. You could also have a lawyer send them a letter asking for the money.

Good luck!

Answer 9

Someone owes you money,you have legitametly done the work,get your money.How ,don't mess around,just put a small claim against them,here in Ontario it is $5000 . They seem to me to be in financial trouble that is what I sense.Check out putting a Lien on their property or house.The idea is "go get em".I was in business for 30 years,vast majority paid up,but some "funny "customers found it was no joke,when I started the Law machine in action.They always paid in the end.Stand by your guns and let them have it with both barrels.how do you open your mouth,just say "I want what you owe,no damned excuses".When they owe,and don't ask you to do anymore work,warning signs are out,they are in trouble!

Answer 10

Are you speaking to a different person every time? If they are local, I would pay a visit in person. If not, after phone calls and e-mails brought you limited response, I agree that they are in financial trouble. If that is the case, a collection agency or lawyer is your only options. Waiting is not an option!