How do you handle non-paying customers?

1 Set clear payment terms

The first step to avoid non-payment issues is to establish clear and realistic payment terms with your customers. This means communicating your deadlines, fees, penalties, and methods of payment before you start any work or deliver any goods. Also document these terms in a written contract or invoice that both parties sign and agree on. This way, you avoid any misunderstandings or disputes later on.

2 Follow up regularly

Follow up with customers regularly and politely by sending reminders, invoices, and receipts as soon as you complete the work. Also check in with them via phone, email, or text to confirm they received your communication and ask if they have any questions or concerns. Keep a record of all your correspondence with them, in case you need to escalate the matter or prove your case.

3 Offer incentives or alternatives

Try to understand the customer's situation and reasons for not paying, and see if you can work out a solution that benefits both parties. You could offer them a discount, payment plan, credit note, or trade-in exchange for their payment. Or suggest other ways of payment, such as online transfers, credit cards, or cash on delivery.

4 Negotiate or mediate

Negotiate or mediate with customers if they continue to refuse to pay or ignore your attempts to contact them. This means trying to reach a compromise that satisfies both parties, without damaging your relationship or reputation. Also consider enlisting the help of a third party, such as a mediator, arbitrator, or trade association, to facilitate the negotiation or mediation process and ensure fairness.

5 Take legal action

Take legal action if all else fails and they still owe you money. Consult a lawyer or debt collection agency to advise you on your options and rights, and to represent you in court or arbitration. Gather all the evidence and documentation that support your claim, including contracts, invoices, receipts, emails, phone records, and witness statements. However, consider the costs and risks of taking legal action, and weigh them against the benefits and chances of recovering your money.

6 Prevent future problems

Prevent future problems and protect your business from them by reviewing your payment policies and making any changes that will reduce the likelihood of non-payment issues. Also screen your customers and check their credit history, references, and reputation before you work with them. Maintain a positive and professional relationship with your customers, and provide them with quality products and services that meet their needs .

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?