Being an entrepreneur (and the independence that comes with it) is one of the most fulfilling things you could possibly experience. However, one of the toughest parts about that independence is making sure you get paid for your hard work. Here are some tips for when you stumble upon a client that just won’t pay (and what to do to prevent these situations).
Of course, please take this as legal information and not legal advice. If you have any questions regarding unpaid invoices or late payments, send me an email at info@artylaw.ca.
- Don’t panic
As awful as it is, you need to stay calm and think rationally about what you will be doing in order to solve the situation. There’s no need to think about what you should’ve done or how you could’ve handled things differently. This will definitely not be the last issue you’ll run into as an entrepreneur so think about it as an experience.
- Document the situation
I’ve mentioned this tip in my blog post about how to deal with copycats and it applies in this situation too. You need to properly document the situation, not only to have the necessary tools to refer to when you try to discuss with your client, but also in case you need to go to court. Make sure you have a record of all your communications, any documents you two have signed (such as a service agreement) and any proof of the work you have done.
- Think differently
If you have tried to get a hold of your client via email for a while now, try the phone. If that doesn’t work, a written letter sent by recommended mail could be another efficient way to reach out. Different people will respond to different means of communication in different ways, so make sure you have explored all of your options before giving up.
- Be flexible
You win some and you lose some. For instance, your client might not pay your invoice because he doesn’t agree on the number of hours spent on the project. If that’s the case, try to come to an agreement that will satisfy both parties (and actually get you paid). You could also offer a discount if your client pays you within a day of coming to an agreement with them. Discuss different payment terms with your client and see what he responds to best.
- Send them a formal notice
If you can’t come to an agreement with your client, sending them a formal notice could be an option. Many people hate the thought of going to court and will prefer settling over being in a legal dispute. You can write the letter yourself, without the help of lawyer, but keep in mind that some people will take the letter more seriously if it has been drafted by a lawyer. You could also have it delivered to your client by a bailiff.
- Take legal action
If nothing works, you could consider going to court to get this resolved. However, before doing so, you should determine whether doing so is worth it or not. Depending on the amount you are requesting as well as how much time you have on your hands, you might come to the conclusion that letting go is more cost efficient for you.
Now that you know what to do when a client won’t pay you, here are a few things you can do to prevent these types of situations:
- Have a service agreement: clients are a lot more likely to respect their obligations if they have signed an agreement (click here to find out more about why you need a proper service agreement)
- Include interest rates in your service agreement
- Invoice frequently and ask for retainers if needed
- Map out all circumstances where additional fees will be requested (after a certain amount of revisions, for instance)
If you need some legal advice regarding what to do when a client won’t pay you, do not hesitate to send me an email at info@artylaw.ca or click the link below to schedule a consultation.
