You’ve just done a great job on a project for a client, and now they’ve decided not to pay you… now what? Unfortunately a lot of entrepreneurs have had to deal with the fact that sometimes clients just don’t pay.
Try to spot bad clients early on
Listen to your gut. If you get a bad feeling about working with someone, there’s probably a reason. If they’re being unreasonable at the start (grinding for discounts or arguing about your standard practices, process, contract, etc) then that could be a warning sign the project isn’t worth your time.
Be clear, as early as possible
Make sure the client is both aware of and completely understands your pricing. Also be sure they understand the costs of extra/out of scope work, and other associated costs with the project, even if you don’t charge for them (an example in web design would be: hosting costs, domain registration costs, licensing photography). The clearer the picture is before the project starts, the less likely the client is going to be surprised at the end and refuse to pay.
Get some when you give some
Stagger payments if possible and always have a down-payment. If the client is wary about a down-payment, citing that they haven’t received anything yet, this could be a good sign you shouldn’t work with them. You can always offer to give them contacts to your previous clients who can assure them you do what you say you’re going to do. Also make sure you get interim payments — when you give a client something (like mockups or a beta website), make sure a payment is attached with that milestone. That way if things do go south, you’ve at least got paid for most of what you’ve done.
Always have a contract, even if they are useless
Contracts are great, as they can clearly list what you are providing, when you are providing it, and the cost associated with providing it. You can refer back to it if a client tells you they didn’t get what they expected. That said, leaning it for legal recourse can cost more than it’s worth, since only lawyers win if you decide to sue. Simply having a contract doesn’t mean you’re immune to clients not paying.
Remain professional, even if they’re being assholes
You entered into a business relationship with the client, so it should stay that way. Refrain from yelling, swearing, threats, etc… even though you want nothing more to curse like a sailor at the person who’s screwing you over. If you need to vent about things, do it to a friend, colleague or punching bag to get it out of your system first. You have basic human empathy towards anything the client could bring up as to why they aren’t going to pay, but that’s not of any concern. It sucks they might have to pay for a messy divorce, or have had to sent their children to expensive spanish military school, but they have an obligation to pay what they owe. You have feelings, but this is business relationship not a “BBF-forever” situation.
Keep track of everything
Save every email correspondence and make notes during every phone call – if you do decide to escalate legally, these things will be helpful.
If you’ve talked them several times, and they still flat-out refuse to pay, there are many things you can do. Some are good business decisions, some are just “dirty pool”. You can also try to go above them (if they aren’t the boss) with threats that an employee is making the company as a whole look bad. Make sure you are clear to the client how you are escalating the situation before you do anything, as a lot of times the threat of something enough to make them rethink not paying you.
Leverage — if you haven’t given them everything, don’t. Just withhold the final deliverables, it’s your right, since they aren’t paying for them. You can also threaten to take down the work you’ve done for them. If they didn’t pay for it, it’s not theirs to use.
Legal action — this tends to cost a lot of money, so it probably doesn’t make sense in most situations. The threat of legal action can go a long way though, so can simply having a lawyer draft up a threatening letter.
Dirty pool — I don’t recommend this, but you can always attempt to simply ruin them. Negative social media can go a long way in hurting brands, so can putting up a website explaining why no one should do business with them (work your SEO mojo), so can putting up a nasty message on their own website (if you have access). You can also contact every single one of their clients and explain they are the type of company that doesn’t honour contracts or pay bills. Yes, it’s dirty and completely unprofessional, but it’s been done. And again, the threat of these actions can go a long way. Obviously, if you go this route, you put yourself out there to possibly be sued by them.
Let it go
If you’ve tried everything you are comfortable trying and they still won’t pay, walk away. Throw a private fit or meditate if you need to, then chalk the situation up to a learning experience. There comes a point where you’re spending too much time chasing money you’re not going to get, when you could be doing work you know you’ll get paid for. so shift your focus back to doing the work you love with clients who pay for your services.