From the Nolo Business & Human Resources Center
Getting Clients to Pay Up
by Attorney Stephen Fishman
Getting work is one thing, getting paid is another.
What to do if a client won't pay.
You completed your latest project on time, sent an invoice to your demanding
client, and are eagerly awaiting payment . . . and waiting . . . and waiting . .
. and waiting. Does this scenario sound all too familiar?
The sad fact is that even the most seasoned independent contractors (ICs)
often have difficulty getting paid. Some clients feel free to pay late; others
never pay at all.
Businesses usually pay their employees like clockwork. They know that if they
don't, the employees can complain to their state labor department, which can
impose fines and otherwise make life miserable for the business. However, this
is not the case when you're self-employed. There is no government agency that
will help you get your money. It's entirely up to you to take whatever steps are
appropriate and necessary to get your clients to pay up.
What's worse, many clients are aware of these hard facts of life and will
purposely pay you late or not at all because they know many self-employed people
simply don't have the will or know-how to collect what they're owed. You don't
have to accept this type of unethical behavior. There are many legal methods
available to get deadbeat clients to pay.
How to Demand Payment
Your first step in collecting an unpaid bill should be to send a statement or
a collection letter requesting payment of the invoice. (Quicken Legal Business Pro provides 30-day,
60-day, and 90-day collection letters for this purpose.) Some firms routinely
wait 60 or 90 days to pay bills because of cash flow problems of their own. If
your clients follow this practice, sending a routine collection letter might
prompt them to put the check in the mail.
Get Personal
If letters don't work, it's time to get personal. It's a lot harder to
withhold payment from someone you know than from a stranger. For this reason,
you shouldn't rely solely on successive collection letters. Instead, telephone
the client. If you're dealing with a large company, you may have to first
contact someone in the accounts payable or purchasing department. But if they
don't prove helpful, don't hesitate to call higher-ups, including the president
of the company.
Explain that cash flow is important to your
business and that you can't afford to carry this unpaid receivable any longer.
If phone calls don't work, make an appointment to personally visit whoever is in
charge of paying you.
Be Persistent
When it comes to collecting debts, the squeaky wheel usually gets paid first.
A client who is struggling financially and has only enough money to pay one
creditor will likely pay the one who has made the most fuss. However, don't lose
your temper, make threats, or otherwise harass the client. This kind of behavior
can get you into legal trouble.
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