How to Deal with Clients Who Refuse to Pay

As an independent contractor or business owner, having a client refuse to pay you makes for a difficult situation. Fortunately, you can adopt some strategies to help make the client hold up their end of the deal. Communicating effectively is an important part of convincing clients to make payments. If this doesn’t work, you have a few legal options you can take to secure payment from your client.

Things You Should Know

Give your client a call and send them reminders through the mail in case they forgot the payment was due, but if that doesn't work, try calling them at work or reaching out to their colleagues.
Even if you're frustrated that you haven't been paid, speak empathetically and patiently with your client, and try to find out why their payment is late.
If your client is having financial trouble, offer to work out a payment plan with them so they don't fall behind again.
Reach out to a business attorney to pursue legal action if the client still refuses to pay.

Method 1

Method 1 of 4:

Communicating with the Client

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1
Call or email your client the day after the payment is due. Send your client a gentle, friendly reminder. They may have forgotten or misplaced the invoice. Your reminder may spur them into action, or at least show them you are aware of the matter.^{[1]XResearch source}
- For example, say, “Hello, this is Charlie with Willie Wonka’s Chocolate Factory. I’m calling to let you know that your bill of $100 USD was due May 29th."
- Be persistent. If you can’t get ahold of a client, contact them every day.
2
Contact the client through their office or colleagues. Some clients will ignore your calls or emails. While you should keep sending these messages, think of other ways you can reach the client. If you can meet them in person or reach them through someone else, you can get your message to them.
- For example, if your client’s office is located near you, stop by and talk to them in person.
- If you did work for a company, you can leave messages with the senior executives.
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3
Send multiple invoices until you get a response. Send the invoice immediately once the bill is late. Then, you can send it at scheduled times, such as every week or month. Also, send the invoice through multiple communication methods so you can be sure the client receives it.^{[2]XResearch source}
- For instance, send the invoice through email and through the mail. Then, call the client to leave a message.
- Some contractors forget to send their invoices when the work is done. Since this can lead to payment issues, make sure you send it right away.
4
Discuss the reason for non-payment with the client. If you are able to reach the client, communicate with them. Explain the invoice, then ask them why they haven’t paid it yet. Sometimes clients have reasons for refusing payment, and understanding their reasoning can help you solve the problem.^{[3]XResearch source}
- For example, tell the client, “I noticed you missed a payment. Is there a problem with my work?”
5
Speak to the client without anger. Take some time to breathe deeply and relax before contacting your client. When you’re ready, call them. Be straightforward, giving them the facts about the invoice. Listen to the customer carefully so you can respond in a positive way. Avoid yelling or shouting, since this will make a tough situation ugly.^{[4]XTrustworthy SourceAmerican Psychological AssociationLeading scientific and professional organization of licensed psychologistsGo to source}
- For instance, say, “I’m sorry you are having a hard time. I know the economy is tough. Let's come up with a solution that will work for both of us.”
- Be kind and empathize with the client so you avoid turning them into an enemy.
6
Respond calmly to threats. If reasoning with the client doesn’t work, they may act with hostility in order to dodge payment. Avoid getting angry, remembering that you have the legal right to payment. Continue to respond to the client with logic and reason.^{[5]XTrustworthy SourceAmerican Psychological AssociationLeading scientific and professional organization of licensed psychologistsGo to source}
- For example, a client may threaten you with a negative review on social media. Say, “I can’t stop you, but you are still legally obligated to pay your bill.”

Method 2

Method 2 of 4:

Convincing a Client to Pay

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1
Work out a payment plan with the client if finances are an issue. Sometimes clients want to pay but don’t have the money available. In this case, it pays to work with them instead of damaging your working relationship. You can turn a client into a loyal customer by making them feel grateful.
- For example, you might say, “I can put your account on hold this month until you’re ready to pay.”
- You can say, “Let’s start a payment plan. How does $50 at the beginning of the month sound?”
- While you would prefer to have the money right away, remember that getting paid eventually is better than not getting paid at all.
2
Discuss service adjustments you can implement to make clients happy. Some clients may complain about your work to justify non-payment. Listen to their concerns and decide if there is anything you can do to address them. You may be able to come up with a simple solution to negate the client’s complaint.^{[6]XResearch source}
- For instance, ask, “Which parts of my work are you unsatisfied with?” You might explain to them why the work was done that way or make minor adjustments to it.
- Remember the scope of your work. If you gave the client what they asked for, you are not obligated to do more.
3
Explain your payment policies if the client still refuses to comply. If you covered your bases, your client agreed to your operating policies when they hired you. Any legal documents they signed or policies they agreed to must be followed. If you remind them of these policies, they may withdraw their objections and pay you.
- For example, you might say, “When you signed up, you agreed to pay the full amount after the 30-day trial period elapsed.”

Method 3

Method 3 of 4:

Taking Legal Action

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1
Send the client a notice of legal action for non-payment. You can include the threat of legal action during any of your regular correspondences with the client. It’s best to wait until the payment is extremely late, at least 30 days, unless you were able to make payment plans with the client.^{[7]XResearch source}
- For example, you may include in an email, “I reserve the right to contact a lawyer in cases of breach of contract and payments more than 90 days late.”
- Research payment laws in your area so you know exactly what legal actions you are allowed to take.
- Contacting a business attorney is a good idea. In most cases, it will only cost about $100 to have an attorney write and send a demand letter to your client.
2
Choose a factoring service if seeking payment takes too much time. In factoring, you sell your invoice to a third party. They pay you a fraction of what you are owed. Once you sell the invoice, you never have to worry about it again. If you don’t expect to get paid or don’t have the ability to chase a client for payment, factoring is a way you recoup some money.^{[8]XResearch source}
- Search online for information on various factoring companies, including reviews from other customers.
- Read the details about factoring services. You may be able to get up to 75% of your total invoice.
3
Hire a debt collector if you want someone to seek payment for you. Unlike with factoring services, debt collection agencies do not buy invoices from you. They are more like bodyguards you hire to do the hard work. Debt collectors take on bills more than 90 days late. They get in contact with the client, sending reminders until payment is fulfilled.^{[9]XResearch source}
- Read the service details before agreeing to use a collection agency. Agencies charge fees for their services.
- Agency fees can be as high as 30% of the money recovered, so consider if this cost is worth it.
- You may also wish to try offering your client a discount as large as the agency fee. With any luck, you can entice them to pay without resorting to legal action.
4
File a court claim if you want to recover the full payment. When discussion doesn’t work, court action can force stubborn clients to pay up. The type of court you use depends on how much money is owed to you. You also have the choice of hiring a lawyer, but you will have to cover their costs even if you win the case.^{[10]XResearch source}
- Most times, filing a complaint in small claims court is a good idea. You can recover up to $10,000 in most locations.
- In small claims court, you do not need to have a lawyer. As long as you have documentation of your work and your client’s agreement, such as a contract, you may win your case.
- For disputes involving large amounts of money, getting a lawyer is often worthwhile.

Method 4

Method 4 of 4:

Preventing Payment Issues

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1
Research clients to look for a history of non-payment. Start your search by typing the client’s name or company and payment disputes into an online search engine. Look for news articles, consumer reviews, listings on websites such as the Better Business Bureau, and any other sources that may mention business dealings. Also, talk to other contractors or businesses in their area to gauge the client's trustworthiness.^{[11]XResearch source}
- Sometimes you may not be able to find any information, especially if you are dealing with an individual instead of a business.
- If you don’t trust the client, you are often better off turning them down and moving on to other clients.
2
Draw up a contract before agreeing to work. A contract is very important in case you run into payment issues. Meet with the client before you agree to do anything. Make sure everyone is on the same page about the scope of the work and how much the client will pay for it. Put this information on paper and have everyone involved sign it.^{[12]XResearch source}
- Stay in touch with the client so you always know their concerns and can communicate any changes in the project’s status.
3
Ask for payment up front to avoid issues. Payment issues most often occur when contractors wait to receive payment when the work is completed. Requesting that a client pay you in advance is useful, especially for larger projects. If the price is high, you can break the work down into stages of payment.^{[13]XResearch source}
- For instance, a contractor working on a home may ask the client to pay half the cost up front, then half when the work is done.
- If a client doesn’t pay for a stage of the work, you have the option to stop working on the project.
4
Make a plan in advance for overdue payments. Come up with a strategy for dealing with non-payments before you face them. If you’ve had a client refuse to pay in the past, find ways to safeguard yourself from missed payments. You can develop a strategy for contacting the client and decide when to involve legal services.^{[14]XResearch source}
- For example, you may issue a payment reminder when the bill is 30 days late and a second warning with an implicit legal threat after 60 days.
5
Institute late fees to encourage prompt payment. Talk this over with your clients and make sure they agree to it first. Compromise on a penalty for missed payments. Since a late fee means more cost to the client, they may be more willing to be prompt with payments. However, you don’t want the fee to be too harsh, since this can drive clients away.^{[15]XResearch source}
- For example, you might agree to charge a $30 fee for every month that a payment is late.
- Be sure to include any late fee agreements in your contract for legal purposes.

Help Communicating with Clients

Phone Call with a Client Who Refuses to Pay

Email to a Client Who Refuses to Pay

Conversation to Work Out a Payment Plan

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Tips

Pretend you’re the client. Think about what would be the best way to get you to pay a bill. This may help you figure out how to approach a client.
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Avoid blasting clients on social media. Assume that other potential clients will see it. It may reflect negatively on your business, driving those clients away.
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Contacting a client over social media can be acceptable as long as you send a payment reminder without getting negative.
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Warnings

Watch out for fees when using lawyers and collection services. These fees can make the money you get from the client negligible.
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Some debts are too small or difficult to chase. You may be better off saving your time and money, focusing on your work instead.
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