Have you ever been stung by a client that just will not pay?
We’ve all been there. It’s an incredibly stressful situation to deal with. No matter how well you try to align yourself and your business to work with your ideal clients, it’s likely going to happen at one stage or another.
To make your life 10 times easier, you need to have a ‘debt collection’ process in place.
And guess what? We’ve got a handy guide below for you to follow next time you have to deal with a non-payer.
Step 1: Make sure you have a really good contract in place setting out –
- What your payment terms are
- When payment is due
- What happens when you won’t be pain on time, i.e. the ability to stop providing your service, allowing you to charge interest etc.
Having a clear, strong contract is key with your clients, especially when it comes to receiving payment.
Step 2: We recommend having a reminder system in place
- If you have an accountancy software that generates invoices, that can do the work for you
- We recommend sending 3 automatic reminders
Step 3: Still no payment? Follow up with 2 personal emails
- Or messages via your favoured method of client communication
- This doesn’t need to be overly formal
- In the 2nd email, mention having to resort to more formal legal action (often this is enough on it’s own to receive payment)
Step 4: Formal action
Still no luck? Time to take more formal action. There are 2 options you can go for
- Set up a relationship with a debt collection company (that fits the needs of you and your business). It can cost a bit, they’ll take a % of your invoice
- Filing a County Court Judgement against them. This is a more serious option, and the last resort. Doing this will register a ‘black mark’ against them/their business
The most important thing to think about is your contracts. You want to get ahead of the game when it comes to these types of situations, with super robust, airtight contracts.
