Here's How to Fire a Client (and Why You Might Need To)

Holding on to every client may be adding to stress and impacting your bottom line. Learn when it pays to let a client go and how to cut ties amicably.

When it comes to client relationships, you may well focus on building a base of good clients for the long term. As a freelancer and business owner, you understand that having a solid base of clients means consistent cash flow. Over time, you can opt to add new clients or expand existing client relationships.

However, over the course of account management in a small business, there will be times you will encounter bad clients. They aren't too difficult to spot. In my experience, a problem client tends to have unreasonable expectations. Some of the difficult clients I’ve worked with wouldn’t budge when I wanted to raise my pricing, for example.

Many entrepreneurs I’ve talked to over the years say that despite the stress and frustration these bad clients cause, they often hang onto them out of fear they won’t find a new client to replace them regardless if they cringe when they see that client’s number or Slack notification show up on their phone.

What to consider before deciding to fire your client

Determining that a particular client is a “PITA” is one thing, but knowing when it is time to let go of them is another. Before making a decision, take some relationship management considerations into account. After all, you don't want to focus so heavily on customer loyalty that you compromise your mental and fiscal wellness by hanging on to a challenging client.

1. How do they treat you?

Unfortunately, some clients out there are just not nice people. You don't have to wait for a particular client to become verbally or mentally abusive before you fire them. Other bad behavior may also justify terminating the relationship.

For example, it’s time to fire a client if they directly insult your work or that of your team members instead of offering constructive criticism. I’ve also “broken up” with clients who didn’t respect my time or repeatedly resorted to "scope creep" (gradually adding more work beyond the agreed-upon project scope).

2. Are their expectations reasonable?

Considering the client needs versus their expectations is also important in determining whether you are making the right decision to fire a particular client. Red flags include frequent last-minute assignments, short deadlines for the work required, and calls and texts beyond normal working hours. If you’ve set clear boundaries and they are ignoring those limits, then you know it’s not the right client for you.

3. How do they address money and payments?

Good clients pay invoices in a timely manner. Many may even pay you within just a few days of completed projects. Ideal clients also understand and appreciate that freelancers regularly raise their rates over time to reflect growth in knowledge and skill. However, some clients do neither. They may wait months to pay while assuming you will still complete outstanding work promptly whenever asked.

4. Is the client honest and ethical?

It's important to align yourself with companies that are honest and ethical in their business dealings. You don't want your own small business to be perceived as dishonest by association, should anything come out (on social media or anywhere else) about your client’s unscrupulous actions. If you know they are not being ethical, then you need to fire that client as soon as possible.

How to fire a client nicely

Hanging onto these challenging clients could be standing in the way of the type of clients you deserve — those that value your expertise, respect you, and pay for the privilege of leveraging your talent. To open the door to a great client, you need to close the door on those that aren’t a great fit.

This means you will have to learn how to fire a client. Doing it professionally and kindly means you can avoid unnecessarily creating enemies along the way.

1. Revisit your contract

To ensure there are no legal issues in the small print, read over your contract to see what is required of you should you terminate the agreement. If you have concerns about the client, it may be a good idea to confer with an attorney, have them review your agreement, and get their advice.

2. Start looking for a new client

While you do need to complete agreed-upon work when you know you are letting a client go, it doesn't hurt to start prospecting for new and better clients to replace that revenue (even ahead of time). Doing so will also help you move on, rather than worrying about the lost income from a difficult client.

I’m comfortable with consistently searching for more desirable clients on an ongoing basis, as a way of continually “leveling up” my game, as it were. Try doing this yourself, to the extent that you’re comfortable with it.

3. Plan your exit strategy

Determine how you can reduce your workload with the client in question so there won't be much left to complete in order to complete your relationship with them. Start turning down any new assignments and decline to sign a new contract, or put it off as long as you can while you finalize your plans.

4. Don't talk yourself out of it

It may seem easier to stay with the known working relationship even if that client causes stress, especially in times of economic uncertainty. But keep reminding yourself that the free time will open up an opportunity to find and secure an ideal client who will pay you more and, more importantly, treat you better.

5. Write and submit a professional letter

It's important to let your client know in writing that you do not plan to continue the working relationship. This enables you to establish a clear exit plan with end dates and project closure.

The resignation or disengagement letter may also be an opportunity to let the client know what was not working in the relationship in hopes that the client may change their behavior for the better when they work with other freelancers in the future.

Example letter for firing a customer

The wording to use when firing a client should be professional and polite. Even though you may never plan to work with this challenging client again, it is always best to adhere to the idea of not burning any bridges.

By parting on good terms, you’ll have a better chance of preserving future opportunities with someone who may know or be connected in some way to that past client. Also, leaving on good terms shows that you have taken the high road, demonstrating your commitment to professionalism no matter how badly the soon-to-be ex-client behaves.

Here is a sample letter to fire a client:

Dear CLIENT'S NAME:

Thank you for the opportunity to work with you on [NAME OF PROJECT]. However, effective [ADD DATE YOU PLAN ON ENDING WORK WITH CLIENT], I will no longer be available to continue working together.

For the next paragraph, you have two options. You can directly address the reason you have decided to end the working relationship, such as lack of payment, different work styles, etc. Or, you can offer a more general reason that neutralizes the situation as shown below.

I have overextended myself and must now reduce the number of clients I represent to ensure the level of service each client deserves.

From there, the rest of the letter should be focused on how you plan to complete any deliverables and hand over client files and information.

I plan to have all work completed by [DATE] and have attached a final invoice for that work. If you need another person to replace me on this project, I do have some referrals that I can extend to you. These colleagues might be a good match for your needs and budget.

Thank you again for the opportunity. Please contact me directly should you have any questions about the project work or final invoice.

Regards,

[YOUR NAME]

Say goodbye to nightmare clients

Firing bad clients helps create the time and energy you need to take on those dream clients who are waiting in the wings to take your small business to the next level. Suddenly, work will no longer feel like a hassle. Instead, you will feel good, knowing you made the right business decision. You’ll be able to enjoy balanced, challenging, and lucrative projects with clients you appreciate and make the most of your talent.

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John Boitnott is a longtime journalist and digital consultant who has worked at TV, newspaper, radio and Internet companies for 25 years. He writes about startups, marketing, leadership and more at Entrepreneur, The Blueprint at the Motley Fool, Readwrite.com, JotForm.com, and his blog. He's also written for Inc, Venturebeat, Business Insider, USAToday and NBC, among others.

This article appeared on Motley Fool's TheBlueprint.