What to do when a customer refuses to pay you

On Behalf of | Mar 10, 2020 | Collections

When you work for a small business, most of your customers will pay you for your services on time. Yet a small subset of your clientele will either delay payment or try evading it altogether. While their debts may seem insubstantial, they can have a significant effect on your business’ bottom line.

Collecting debts from your clients may prove difficult. But following these steps can improve your odds of receiving payment.

Take the path of least resistance first

You may have already sent your client an email, voicemail or letter reminding them of their debt. You might consider further attempts at doing so futile. Yet your outreach could prove useful when done with kindness. Your client may have missed your initial message, or they may have forgotten to make their payment. Neither case may be true. But approaching the debt in a friendly manner is more likely to lead to repayment – and repeat business.

Take the legal route when necessary

Further attempts at contacting your client may go nowhere. In this case, you can consult with an employment law professional to draft a demand letter. This letter declares your intent to both collect the debt and pursue legal action if your client does not pay. If the letter proves ineffective, you could pursue your client in small claims court or through a civil lawsuit. By Rhode Island law, you would take your case to small claims court if your client owes you $2,500 or less. If their debt to you exceeds $2,500, you will opt for the civil suit instead. Yet if you hope to avoid the court system altogether, consider hiring a collection agency. You’ll only receive a percentage of the debt owed, since the agency takes a cut. But your client may feel obliged to pay under the agency’s pressure.

Pursuing debt is stressful. But understanding the ways you can do so makes the process less daunting. With a little tact, you can track down and receive the payment owed to you.

Archives

FindLaw Network