Trouble Getting Customers to Pay?

For small business owners, deadbeat customers can be an ongoing challenge. Use these insider tips for getting your customers to pay.

Find out more about Business Accounting with LZ Books

Excellent

by

Heleigh Bostwick

Heleigh Bostwick has been writing for LegalZoom since 2006, touching on topics as diverse as estate planning and kids, copyright laws and school performances, celebrity trademarks, myths of starting a business, and plant patents. Heleigh has a degree in botany from Connecticut College, a master of landscape architecture from the University of Pennsylvania, and a certificate in appraisal studies of fine & decorative arts from New York University. Prior to becoming a freelance writer, she had several careers including jewelry cataloguer for a New York City auction house, environmental scientist, and landscape designer—all of which contribute to her knowledgebase as a writer. Because of her expertise in environmental regulatory analysis, she is adept at translating complex information into user-friendly content, a useful skill when it comes to writing about patent and trademark law.Heleigh enjoys writing because it offers the opportunity to conduct research, interview people, keep up on the latest technologies, and write about what she's learned.

1. Send a second invoice

If 30 days go by and you still haven't been paid, send a second invoice. Make sure it's clearly marked as a second notice, preferably in big, bold, red, letters. You can send a second invoice by regular mail, email, or both. To make this a much easier process, you can even use an invoice template.

One common mistake many freelancers make with the second invoice is not including a late fee or long payment terms. If you don't have one in your invoice, your clients may have little incentive to pay on time and eventually may even forget about it.

2. Call the customer

If you've sent a second invoice and haven't received payment, it may be time for a phone call. Be polite, but firm. Give the client the benefit of the doubt. Perhaps your invoice was overlooked?

If so, then make it clear that you expect payment by a specified date. Unfortunately though, when it comes to collecting money from someone who doesn't want to pay, being Mr. or Ms. Nice will get you nowhere. If the customer is resistant or non-responsive, consider the next step: a demand letter.

3. Generate a demand letter

When you've exhausted less formal requests, a demand letter is usually the most effective way to get results.

A demand letter is the first step in the legal process of collecting money owed to you.

Written by an attorney, this legal document can prove effective, especially if you think you may need to take the client to small claims court.

The demand letter should be concise and to the point, clearly stating the issue, your attempts to resolve it, the amount due, and the date payment was due. Avoid threats or personal attacks. Make several copies for your records and send the demand letter to both yourself and the client via certified mail, return receipt requested.

4. Take it to small claims court

As a follow-up to your demand letter, you can decide to take the client to small claims court. Be aware however, that even if you win your case, it doesn't guarantee you will ever see your money.

5. Call a collection agency

Alternatively, if you decide to forgo small claims court, but still want a shot at getting your money, then hire a collection agency to handle it.

Only you can decide whether the money you're trying to collect is worth the cost of chasing it down. But as any entrepreneur will tell you, you can't make money if you don't collect it.