What To Do When Clients Don't Pay -- 6 Strategies to Get Your Money

You're psyched! You just landed a new client who is going
to keep you busy with projects. Life is good.

You love the people, you're really enjoying the work,
things are going great. Everything proceeds along smoothly
for several months until that fateful month where you
submit a large invoice and payment isn't immediate.

"No problem" you think. "Things are a little tight. It
will be paid a little late."

What are your options when a client doesn't - or can't -
pay you?

There are several things you can do when a client doesn't
pay you. Before you start down the path however, you need
to think about what type of future, if any, you want with
this client.

1. Gentle reminder.

Your invoice could have been forgotten, misplaced or buried
in a pile on your client's desk. If they have gone past
your due date, email - or call depending on what is most
comfortable for you - a gentle reminder asking them the
status of payment.

If you use QuickBooks or QuickBooks Online, you can also
email a statement directly from the system.

2. Be personal.

If you've reminded the client and no payment has come, it
is time for either another email or a phone call. Your
client may tell you that he is very busy and apologizes
that he "forgot" again.

Explain that cash flow is very important to your small
business and that you can not afford to carry the unpaid
invoice any longer.

Always remember to make it easy for your client to pay you.
Tell him that you are happy be paid via wire, PayPal,
credit card - offer him all the options and be sure that
you have more than just "send a check" available. Make it
as easy as possible.

3. Be the "squeaky wheel".

If your client is having his own cash flow issues, he may
need to make hard choices about who gets paid when. By
being the "squeaky wheel", you insure that you are at the
forefront of his mind when he is paying bills.

4. Cut him off.

As hard as it is, sometimes you need to tell the client -
even though you've become friends - that you can not do any
additional work until your invoices are paid in full.

As a small business owner, you are responsible for the
running of your business and, as a result, there are times
when you need to make tough decisions that are best for
your business. You can't afford to work without
compensation and your client should understand that.

5. Get tough.

You've tried being gentle. You've tried being personal.
And you've squeaked so many times that you're tired of
hearing your own voice. Now it's time to put that prepaid
legal plan to use!

Have your attorney send a formal letter stating that if you
are not paid, in full, within X number of days, that you
will either take the client to small claims court (the
normal limit is between $2,000 and $7,500 - it varies by
state in the U.S.) or to arbitration. Whether you sue or
go to arbitration depends on the contract you have with
your client as some state that disputes will be arbitrated.

6. Bigger than small claims.

If the client owes you substantially more than the small
claims process will allow you to sue for, you may wish to
sue in a formal state trial court. Debt collection cases
are usually simple and few collection cases actually make
it to trial as most defendants either settle before trial
or fail to show up for court (in which case you would
receive a default judgment).

Chances are if you threaten legal action, your client will
pay up. If he doesn't, you may have to follow through on
your threat. Just remember to make this decision taking
into account how much you are owed, your time for the legal
action and whether or not you ever wish to work with this
client in the future.

Note that if the client never pays you, you *may* be able
to deduct the amount as a "bad debt". See your tax advisor
for more information regarding the bad debt rule.

You want to take collection actions that you are
comfortable with while thinking about how they will affect
your future relationship with the client. Keep in mind
however that you are a small business owner and should be
promptly paid for services rendered and accepted. After
all, you didn't go into business for yourself to work for
free!

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Online Business Coach & Entrepreneur, Sandra Martini
teaches small business owners how to create more success in
their business while maintaining their sanity and having
fun. Sandra's coaching programs are available via
teleconferencing, emails and telephone calls. For more
information and to receive the FREE special report, "7
Wealth-Building Secrets of Successful Entrepreneurs", go to
http://www.Online-Biz-Coach.com .