5 Ways To Prevent Non-Paying Clients

Include payment terms in your contracts!

Include payment terms in your contracts!

Non-payment from clients most often occur because of 5 common reasons:

1. They forgot – This is an easy problem to fix.  Yes, chasing unpaid invoices is a tedious, unfair and uncomfortable task.  But if you don’t do it, you risk being forgotten. Don’t be afraid to ask for your money.


2. They’re unhappy – Be sure to have a quality assurance process while working with your client.  Check in with them about their satisfaction before they have the opportunity to withhold payment.

3. They’re used to not paying on time – Either because it’s not a priority or because they’re accounts payable department is super corporate and has 100 steps required before setting you up in their “system”.

4. They can – Certain large corporations will prioritize their invoices based on importance and amount due.

5. They can’t – Sometimes clients can’t pay because they simply don’t have the funds.

The following steps are to help you with well-intentioned non-paying clients.  This is not going to protect you from fraudulent transactions.  After all, a miscreant is a miscreant and there’s a different sets of rules for those.

1. Clearly outline payment schedule and expectations

It goes without saying, if you’re getting into business with someone, there should be some sort of a written agreement.  From there, make sure to outline the expected payment plan in your agreement. What percentage is due at signing? When is the remainder due?  Does it match the due date on your invoices?  With that, be proactive and have an invoicing process.

2. Lay out the penalties for not paying

Within your contract with a client, make sure to also outline the penalties for not paying.  This could include late fees, withholding your services or submitting an unfinished product should payment not be received.

3. Require the client to provide a back-up payment

As a means of security, some vendors will require to keep a credit card on file for security purposes or damages regardless of the original form of payment.  Beware of the “phantom card”; some clients provide a credit card number they know will decline.  Call your credit card processing provider and ask for an authorization on the card for a small amount to ensure the card is active.

4. The follow-up needs to be just as timely

Set calendar reminders for yourself to follow up with the client a few days before payment is due.  Paypal and Quickbooks Pro provide a feature where you can set your invoices to send automatically on designated dates.  When payment is past due, set reminders to follow up with the message getting more intense each time.  Remember to never lose your professionalism. 

5. Create a payment plan

If your client truly can’t pay because of a lack of funds, setup a payment plan.  This is the second-to-last resort before having to take them to court.  Legal fees are expensive so any payment is better than no payment, plus legal expenses can also add up.

When all else fails, pursue legal action.  There are great alternatives before having to actually take a client to court such as out-of-court arbitration.  Check out National Arbitration Forum,    American Arbitration Association, or JAMS.

And I’ll leave you with words of someone I admire, Keith Ferrazzi who says “Don’t exchange gossip for currency.”  Be sure not to discuss your clients’ financial status with others unless you’re preventing another vendor from falling victim to the same scenario.  And even then, stay professional in how you relay the message.

et Voilà!