5 Things to do When Customers Won't Pay

We've all been here before. You were hesitant to take this customer on because you just had a feeling they'd be a problem, and lo and behold, they were exactly who you thought they were. You did a job and now they wont pay...

What is there to do when your customer doesn't pay? What's legal and illegal? Do you even care at this point? I know the feeling and my advice to you is to always care about how you approach these situations, because you don't want to do more harm to yourself than good. But let's face it, when a customer doesn't pay right away, it's usually a sign that they never will pay. The hard truth is: the longer the invoice goes unpaid, the less likely the customer is to come forward and pay it.

What NOT to do

Please whatever you do, don't dump trash on their property for failure of payment. I know you think this will feel awesome and empowering, but it's a literal crime, and you could be in serious trouble if you get caught. I know this because I too wanted to do this once early on when I was in the truck, and luckily thought to call an attorney first to get his take. I found out that in doing this, even if it's the customer's own junk, it's considered illegal dumping, and if caught, you'll have to re-clean it up, pay for it to be cleaned up by someone else, face a fine by the town, and potentially have legal charges brought against you, not to mention possibly dealing with the state and DOT for your companies wrong doing.

Don't threaten the customer in person.

Don't threaten the customer in writing.

Don't threaten the customer verbally.

You can't keep calling and pestering the customer either, because doing this enough is actually considered harassment and you could find yourself in trouble with the local authorities for that as well. I know, I know - how is it harassment if they owe you something? I feel the same way. I feel like I have the right to harass them to get paid too, but that's not how the law sees it, and that's all that matters unfortunately for us.

I know how good it might feel in the short-term to threaten and dump a bunch of crap in someone's driveway or yard, but trust me, it's not worth the risk. This type of stuff really is just a function of the business and should be treated as such. Kind of like how retail stores have "theft" built into their expense sheet. No matter how much you try to prevent it, it will always happen and you as the business need to do well enough and charge enough to cover these types of situations. From my own personal experience, we've had to write down about $6,000 in unrecoverable invoices from clients that simply refused to pay after a job was completed.

It pains me to write that number above, and I immediately go back to that dark place because these customer are literally STEALING from me... but there's nothing more I can do. Below I've listed some of the actionable things you can do to try to get paid that have worked for me in the past. They are usually successful with most trouble customers, so I hope this can help you in your business, too.

Tip #1 - Take a Baseball Bat to their Kneecaps

NO, I'M KIDDING DON'T DO THIS! You're not Tony Soprano!

Real Tip #1 - Be Candid

Try to get a hold of the customer on the phone so they can hear your voice. Reading texts and emails can misplace emotion and doesn't often convey the severity if the situation. Speaking on the phone or in person does more for the conversation because the inflections in your voice will better connect with the customer so they know your sincere in your efforts to make things right. I'd first ask if they're unhappy with the service and if you did anything wrong. Just see what they say. There may be something so ridiculous that happened that you didn't even know about. Get their feedback and you may be able to troubleshoot the situation right then and there, resulting in full or partial payment for the service provided.

Tip #2 - Come from a Place of Empathy

If you're able to speak with the customer, try to position the conversation empathetically. In other words, explain how what they're doing hurts you, your business, and your family. Explain the trickle down effect that a customer not paying their bill has on so many others. Assuming you got through step one and they're still unwilling to pay, explaining why they're a POS in kind words will go a long way.

Tip #3 - Work with an Attorney

If you work with an attorney, have them send a collection letter on your company's behalf. They'll write in some nice legal jargon, as well as the demand for payment. Be sure to include the full invoice and any supporting documents with this legal letter to your customer. Most normal people will see a letter from an attorney's office and pay immediately because they don't want to go through the hassle and expense of going to court. However, low lives are a different breed and have a lot of time to be terrible, so sometimes these types of customers still wont pay no matter how much legal pressure you put on them.

If you don't work with an attorney or think you can't afford one, email me and I'll send you an affordable option that my company personally uses. It's less than $50 per month.

Tip #4 - Work with a Debt Collection Agency

Go online and find a few debt collection agencies to work with. They all have different fees for their services (and to be honest, by this point the odds of you getting paid are basically zero if this is what you've had to resort to), so having a company like this collect anything at all is a win. Think of it that way, and you'll sleep better at night.

Tip #5 - Go to Small Claims Court

If you love punishment and want to waste more of your hard-earned time and money, look no further than your local small claims court! Small business is always guilty until proven innocent. This goes for fines assessed on your business by stick-up artists like the DOT, and also when you to a beatdown customer to small claims court to collect a debt. Let's be hypothetical here for a moment and say you were actually able to get the customer to show up to court in the first place. You plead your case in front of the judge and the judge had mercy on your soul and granted you the full payment of the invoice (which almost never happens, it's usually only part of the total invoice). Hooray, you won! Time to celebrate. Wrong. The customer still may not pay.

Now what do you do?

Unfortunately you can't access their bank account or garnish their wages to pay your invoice. People are protected from this. You could pay a court Marshall a few hundred dollars to serve them and start that kind of collection process requiring a re-visit to court (all pre-funded by you again), but the odds are not in your favor. If you're going to court with another business, you do have a couple more options, but the outlook is still rather bleak.

The Unfortunate Wrap Up

In the end, customers that don't want to pay you, wont. They'll never pay you. You'll probably never get your money from them. They've successfully stolen from you and they'll have to live with that. Flag their account and never work with them again. If you know they do business with another company, you could tell that company what happened as a warning and maybe that'll make you feel better.

Unpaid debts are just a part of business. Factor them into your overall expenses and keep moving forward to do your best to grow and improve every year. This type of stuff will never go away, and it's best you don't let it effect you too much. Focus on your business and the tons of great customers you have. Provide them will more value and let the referrals roll in. Block out the bad and let in the good. You've got this!

If you have any questions about this subject - shoot me an email! I'm happy to discuss this topic further, and also share the delightful tale of the woman from Bridgeport who wouldn't pay me because she said "Jesus will take care of this." Much love to Jesus, but unfortunately, I am not sure this is top of his to-do list today, ma'am.