Do you have clients who won’t pay? Have you recently provided a client with goods or a service, just for them to turn around and tell you that they won’t pay?
If so, you are likely feeling very frustrated and worried about this whole ordeal, and you may have little to no idea about how you can go about getting paid!
Not receiving this payment may be quite detrimental to your business as well, of course depending on the specifics of the matter.
Regardless of the results of the lack of payment, it will be a topic of annoyance at the very least.
This is why it is vital that you are aware of what you can do if a situation like this arises so that you can get paid the money you are rightfully owed.
In this article our debt collectors will discuss 4 ways that you can deal with clients who refuse to pay once you have already provided them with goods or a service.
Clients Who Won’t Pay for Goods?
Before taking any action, it is wise to reflect on the reason that they may be choosing to not pay.
If you think that this reason may be anything other than simply not wanting to pay, you may wish to choose a different method of receiving payment than you would otherwise.
These reasons can include the following (amongst other reasons):
- Dissatisfaction
- Financial Difficulty
- Unethical Behaviour
We will expand on these in more detail below.
Clients Who Won’t Pay because of Dissatisfaction
One reason that a client may choose not to pay you for your goods or services is if they are not satisfied with the product or the work done.
Whether or not this is valid is a different conversation, but if your client has expressed that they are not happy with whatever your business provided them with you should enquire further before taking legal action.
Clients Who Won’t Pay because of Financial Difficulty
Another reason that a client may choose not to pay for the goods or services that you provided them with is if they are currently facing some type of financial hardship that renders them unable to do so.
Although this is not necessarily your concern and you should be paid regardless, treading a little lighter in the situation can be of benefit.
If your client declares bankruptcy or insolvency, there is a chance that you will not be paid at all!
Clients Who Won’t Pay because of Unethical Behaviour
Another reason that a client may choose not to pay for the goods or services your business provided is if unethical behaviours were undertaken by yourself or your employees.
Unethical behaviour in a workplace may be considered by the court to be a valid reason to not pay (misleading and deceptive conduct for example), so approach this situation with caution!
This may also include unethical behaviour by your client / customer too. They might just be the type of person who can rip people off and sleep like a baby.
How to Deal with Unpaying Clients
There are a number of ways to deal with clients who won’t pay for goods and/or services. Some of these include:
- Negotiation.
- Sending a letter of demand (or getting a lawyer to send one).
- Try alternative dispute resolution; and finally
- Commence legal action.
We will expand on these in more detail below.
Try to Negotiate with Clients Who Won’t Pay
One way that you can deal with clients who will not pay their dues for goods or services that you provided them with is by trying to engage in a negotiation.
When clients cannot pay their debts, it is the main goal of you as a business owner to work out a scenario in which they do not declare bankruptcy and you still receive the money you are owed.
Negotiation is a great route if you are looking to collect the debt while either maintaining a business relationship or organising a payment plan with an individual in financial trouble at the moment.
While it is best for your business if you get paid as discussed, receiving payment over a different period of time or with other negotiated payment terms is still preferable to not being paid at all!
Send a Legal Letter of Demand
Another way that you can deal with clients that will not pay once the exchange of goods or services has already taken place is by sending them a letter of demand to pay up.
A letter of demand is a legal document that you can send to your clients to, in this circumstance demand that they pay a debt, though it can demand many other things also.
This route is especially effective if the reason that your client is not paying is that they think that you are not going to do anything about it or they simply do not want to pay.
When you send a client like this a letter of demand, it can act as a real wake-up call for them to pay you what they owe or face the legal consequences of non-compliance.
Furthermore, if your client isn’t paying for any of the other discussed reasons, a letter of demand can act as an incentive to speak up about their issue so that it can be appropriately resolved in a manner that works for the both of you.
It is wise to have a lawyer look over or completely construct your demand letter as they will have had experiences with them in the past and more complex knowledge of what they should include.
Try ADR Techniques for Clients Who Won’t Pay
Another manner in which you can deal with clients who will not pay for a product or service that you have already provided them with is by using alternative dispute resolution, or ADR techniques.
ADR methods are the several options an individual or business will have outside of litigation to resolve a dispute that they are involved in.
This can be very effective in saving both time and money that would otherwise be spent in court while simultaneously coming to a decision on a matter that works for all involved.
Methods of ADR involve mediation, adjudication, and several others that can help you in different ways.
Commence Legal Action Against Clients Who Won’t Pay
The final thing that you can try to deal with a client that will not pay for a product or service that you have already provided them with is by taking legal action against them.
Litigation, or legal action, can be a very productive means of getting what you need from a matter.
However, it may also result in one party walking out with all and one with nothing (which may be you) and breaking down professional relationships that could have otherwise been beneficial to your business.
Key Takeaways
Dealing with unpaying clients can be a frustrating and tiresome task.
This is why it is best if you know some ways that you can manage this ahead of time and prevent the issue from escalating more than it has to.
You may also want to hire a debt collection agency to manage this issue with the professionalism and knowledge that you may simply not have access to as a business owner.
They can be incredibly successful with collecting your debts and can give you the time that you would have had to spend pursuing the matter yourself!
Advance debt collection is an Australia-wide commercial debt collection agency and credit and accounts receivable management. We can recovery your debts, conduct skip tracing, and manage your accounts receivable. We collect your debts for commission only. This means no collection, no commission. We are professional debt collectors with combined 20 years of experience to help you collect your debts. We are partnered with expert litigation lawyers with years of experience in debt recovery, enforcement, and insolvency. Under the Agents Financial Administration Act 2014 Advance Debt Collection Pty Ltd hold authority number 4583821 to act as a debt collector. ADC Advance Debt Collection® is a registered trademark.
