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What's the next step if a customer fails to pay?

Although you may enjoy your work, you don't run your business just for fun. In all probability, you depend on it for your livelihood and the support of your employees. That's why one of the most frustrating parts of running a business is waiting for clients and customers to pay what they owe you.

After all, you have bills of your own to pay, so when a customer makes the excuse of falling behind with other creditors, you can certainly relate. However, if your customers' late payments are the cause of your business' financial struggles, you may wonder if there is a way to get your clients to pay more consistently.

Clear expectations

From the beginning of any transaction, you can lay out your terms for your customer. Not only can you outline the projected costs and contingencies up front, but you can explain your payment policy, including increasing fees for late payments. Customers often appreciate knowing what to expect and what you expect of them. In this way, you build trust with your client.

Once the work is complete, you can follow these steps:

  • Mail or email invoices immediately after completing the work to avoid losing or forgetting them.
  • Send your customer a friendly reminder by mail when the due date passes.
  • Follow up with a phone call to see if your company's work was satisfactory to the customer, and use the opportunity to remind the customer about the overdue payment.
  • Be persistent without being aggressive.
  • If you offer a service, set a deadline for when your services will stop unless you receive payment.

If an invoice system isn't working for you, you may have to consider moving to payment up front. This may make some customers nervous, but if your company has a history of dependability, you may be able to use that to reassure them. Another alternative is to require a down payment, which may clarify for you which customers may have difficulty paying you.

It is possible that your client has fallen on hard times, and it is up to you to determine if you will modify payments or accept installments. However, you deserve payment for your work, and customers who refuse to pay what they owe you are effectively stealing from you. After all your efforts to collect overdue payments have been unsuccessful, you may want to look for legal assistance.

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