All small business owners and freelancers have been there at some point, a client is always slow paying or misses an invoice payment deadline. But what can you do when a client doesn’t pay?
We explain how to handle non-paying clients and how to prevent it from happening…
How to prevent non-payments
1. Screen new clients
When you take on a new client it can be a good idea to do some research. Google the company and business owners, look at online reviews, and ask your contacts if they have had any dealings with them before. If you find something that raises a red flag, don’t ignore it.
2. Make the payment terms clear
Always include the terms of payment on your invoices and contracts to make sure the client know when payment is expected. Explain these terms upfront before you undertake any work.
Invoices and contracts should include when payment is expected (e.g. 30 days from date of invoice), preferred payment method, and your late payment policy.
3. Ask for a deposit
If you’re working with a new client or one that has a history of not paying on time, it is worth asking for a deposit up front. This is common for freelancers and gives you peace of mind that you will at least be paid for a portion of the work.
What to do if an invoice hasn’t been paid
1. Send a reminder
If an invoice hasn’t been paid by the deadline send a reminder via email in the first instant. It could simply be that the invoice has been missed or forgotten and a quick, polite email will solve the problem.
2. Speak to a solicitor
If emails and reminders are being ignored, and the invoice is for a substantial amount then it might be worth speaking to a solicitor. Often a solicitors’ letter is enough to scare a client into paying as they won’t want to face any additional costs.
3. Hire a debt collection agency
Another option is to use a collection agency to recover the money for you. You pass the invoice and client details to them and they do the rest. A visit from a debt collection agency will usually scare a client into paying any outstanding monies.
Do your research before hiring a collection agency and make sure they are qualified.
If you need help with putting together invoices and making sure all the necessary information is included, get in touch with Magpie Accountancy for more information.