If you’ve run a business at any point in your life, you have likely run into a situation where a business to whom you have provided services in the past with no issue, suddenly decides not to pay for what you have provided.
This can be a sticky situation and is usually caused by a trust-based system, where prompt payment and good behavior on the part of your client prompted you to send them completed products or provide subsequent services before full or partial payment was received.
There is no way to completely avoid this problem, except to require that all clients pay a deposit or in full, regardless of how long they have worked with you or how good the business relationship has been. This approach is good for your cash flow and bottom line, though perhaps not as useful for relationship building.
If you find yourself dealing with this kind of client in the near future and the loss in income is not significant (for large amounts, definitely get a lawyer), here are the 3 steps to take to protect yourself from further damage without pursuing legal aid.
1. First, ask them.
Communicate with the client in a friendly and professional manner to ensure that there was no misunderstanding regarding the fees to be paid and the terms of payment.
2. If they see the light, carry on as usual.
If it turns out that the lack of payment was due to any kind of reasonable misunderstanding, and the client agrees to pay the balance, your problem is solved and you can continue with the business relationship as usual; however, require a deposit or full payment upfront as a safeguard in the future.
3. If they don’t, cut the loss and move on.
If the client does not provide a reasonable explanation or reason for the lack of payment, then kindly inform them that a note indicating the lack of payment will be placed on their file and they will be refused further service until the balance is cleared at their discretion.
Never let things turn nasty if you can avoid it. Keep your communications professional, but clear and firm. If for whatever reason things are taken to court, your style of communication and choice of word can be used against you, so maintain your cool even if you feel quite the opposite inside.