What to Do When Customers Won’t Pay Their Bill
Are your clients stalling on making payments on their balance due? Here are some options you have if a client refuses to pay their invoice.
In some cases, a simple reminder may suffice to convince a client to pay their account; in other cases, You might need to take more drastic measures or enlist outside assistance.
Send your bills in advance, impose late fines, and establish payment schedules to reduce missed payments.
You might need to engage a debt collection lawyer if you continually nag your consumers for payment but don’t get any. Alternatively, you might go to small claims court with the client.
Small company owners who are struggling with a customer who won’t pay their bill should read this article.
You might be familiar with an invoicing system if your company uses one.
How to get customers to pay overdue bills
Take the following steps when you’re struggling with a customer who won’t pay their bill:
1. Send a gentle reminder.
The first step in getting payment is sending a consumer a polite reminder that their account is past due. Receiving that initial follow-up is sufficient to persuade a client to pay as soon as possible because most of the time, late payment was an honest error.
You might want to introduce the issue slowly since Greg Waldorf, a lecturer at Stanford University and the former CEO of the invoice-generating service Invoice2go, recognized that it isn’t always simple to talk about money.
Utilize the chance to inquire about a client’s pleasure with your services before bringing up any upcoming or past-due charges, advised Waldorf.
2. Send an updated invoice.
According to Hunter Hoffmann, chief marketing officer of AmTrust Financial Services, some clients attempt to put off paying by saying they misplaced the bill or need to reconcile their records to discover the right payment amount. Hoffmann suggested eliminating this justification if this is the case by issuing a new invoice straight away, even if you are aware that the client has the original.
3. Ask why the client isn’t paying.
If your customer still refuses to pay, be receptive to learning why. Asking them about their pleasure with your work, their financial difficulties, and anything else that could be a factor in their unwillingness to pay is advised by Ben Giordano, the owner and founder of FreshySites.
“You may work toward a settlement with the client/customer once you know why they’re refusing to pay,” Giordano added. Remember that everyone is simply a person and that seldom is someone intentionally trying to injure someone else. If given the chance, most individuals are reasonable and eager to find a solution.
4. Demand payment more firmly.
Demand payment from nonpaying customers more vehemently if they ignore your emails and phone calls. According to Hoffmann, service companies that often interact with their clients are most suited to issue an ultimatum.
Set a firm cutoff date for service to motivate them, Hoffmann said. It’s remarkable how quickly they can come up with a payment plan when they consider how hard it will be to find a replacement for your service in a few days.
5. Escalate the situation.
Waldorf suggested demanding a payment deadline and following up until the consumer makes the payment. Send your original contract again, if required, and be sure to mention that you’ll take legal action if the bills aren’t paid on time.
Create a demand-payment letter, a formal written letter that describes the amount that is owed to you and specifies what will happen if the debt is not paid by the due date, to demonstrate to the client that “you mean business.”
6. Hire a factoring service.
A factoring service for invoices might help you acquire the cash you need while you’re waiting if you’re short on cash and don’t know when a client will pay. You can sell your accounts receivable to a business using a factoring service for a specific percentage of the account’s value, often between 70% and 90%. The money is then advanced to you within a few days by the provider. The factoring company then collects the payments from your clients and distributes the remaining funds to you, less the service charge.
However, factoring services are not collection firms. Before deciding to buy your customers’ bills, they do a credit check on them. The service fees mount up if you utilize this service for several clients’ bills, and you might end up losing money.
7. Hire a debt collection service.
If everything else fails, it could be time to work with a debt recovery company, which specializes in retrieving payments that are often more than 90 days overdue. The service takes care of following up with the client and uses tried-and-true methods to persuade the person to make a payment.
