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When the
Customer Won't Pay Chances are most of your customers pay you within a reasonable amount of time. But sooner or later you will have to deal with a customer who pays very slowly or not at all. What can you do? And just importantly, what can't you do to collect the money owed you? Here is what you need to know. First things
first If you work on a
retainer basis or provide services under a contract, make it clear what
services you will charge for, what deliverables the customer will get for
the fee, and what work will incur additional charges. Be sure to let the
customer know how often you will bill and how long they will have to pay
each bill. Put it all in
writing and be sure to include a section about your rights and
responsibilities regarding ownership of products, intellectual property or
records of work you perform if bills are not paid.
(Have your attorney draw up
a boilerplate agreement that will work for most customers or clients.) Keep an eye on
receivables Send out reminder notices promptly to any client who doesn't pay within a predetermined time frame - usually ten to 30 days. If a client still doesn't pay after reminders are sent, have someone from your accounts receivable department call the late-payer and try to determine the cause. If you don't have an "accounts receivable department" have a spouse, secretary or bookkeeper play the role. If the customer is one you want to keep and is worth keeping, using such an intermediary will make it easier to maintain a good working relationship with the customer after the bills get paid. If the company or individual is having a financial problem, offer them a chance to pay you in installments. If those initial attempts at collecting do no good, consider more aggressive means to collect what you are owed:
Don't tell your friends at the weekly Rotary meeting that the customer is a deadbeat, and don't plaster online bulletin boards or mailing lists with notes telling the world that your customer is a bad credit risk. If you do things like that, you can get yourself sued. You can also get yourself into legal hot water by making threats, using harassing or abusive language, making collection calls at odd hours or too often, or by making false statements about what will happen if the debtor doesn't pay. Copyright 2002, Attard Communications, Inc. All rights reserved About the author |
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