Dealing with Difficult to Collect Debts
Bad debt is not something anyone enjoys but believe me, it is listed as a financial statement item for a reason. Because it happens from time to time. A client may appear to be the nicest and most cordial of clients, but when it is time to pay, they are no where to be found. What can you do about it?
The Example: Let's say for example that you have a new client. This client would like you to perform Service "A". You complete Service "A" and bill the client. You wait for a few days (if you are emailing the billing) and nothing. You have decided to wait a couple of weeks. Then you send a reminder invoice thinking the client has either misplaced the original or never received it. Again, you wait awhile before you email them to ask for payment.
An email returns to you and they reply, "Yes, I received it and I didn't agree to this dollar amount. Revise the invoice to a lower price and I will pay it." Uh-oh...this isn't a good sign.
You decide to tell the client that the fee for Service "A" stands and kindly remit payment. No response.
Before you know it, the client is furious and feels you are ripping him or her off.
Okay, STOP.
The Basics: Before Service "A" is performed, did you get a contract together to spell out what the service is and what the fee shall be? Did the client sign it? Okay, then you have a leg to stand on. You say you DIDN'T get a contract signed before starting work? YOUR MISTAKE!. And, to add salt to the wound, you don't have a leg to stand on in court.
Depending on the dollar amount, you could take your client to small claims court to collect your fee. Unless you have a straightforward contract that is signed by both of you, odds are you wouldn't win. Not to mention there are court fees and costs associated with small claims court.
How to Collect: Refrain from getting into a name calling contest or hurling accusations and ultimatums. If you HAVE A SIGNED CONTRACT - Decide what you want to do. If you are willing to go to court, then notify the client in writing and allow them one more chance to pay. If they refuse, then off to small court you will go! If you DON'T HAVE A SIGNED CONTRACT: Ask them kindly once more via email or certified letter (return receipt) and ask for the client to remit payment by a certain date. Try to work out some sort of arrangement to get your fee, whether it is monthly installments etc.
Client Refuses to Pay, PERIOD: Say hello to the general ledger account, "BAD DEBT" and remember the experience. When money is involved, it is unlikely that you will make the same mistake twice. Wish the client well and ALWAYS maintain your professionalism. Let them know that you are writing the fee off as Bad Debt and let it go.
Next time, I bet you won't have to say "hello" to bad debt anymore!
The Example: Let's say for example that you have a new client. This client would like you to perform Service "A". You complete Service "A" and bill the client. You wait for a few days (if you are emailing the billing) and nothing. You have decided to wait a couple of weeks. Then you send a reminder invoice thinking the client has either misplaced the original or never received it. Again, you wait awhile before you email them to ask for payment.
An email returns to you and they reply, "Yes, I received it and I didn't agree to this dollar amount. Revise the invoice to a lower price and I will pay it." Uh-oh...this isn't a good sign.
You decide to tell the client that the fee for Service "A" stands and kindly remit payment. No response.
Before you know it, the client is furious and feels you are ripping him or her off.
Okay, STOP.
The Basics: Before Service "A" is performed, did you get a contract together to spell out what the service is and what the fee shall be? Did the client sign it? Okay, then you have a leg to stand on. You say you DIDN'T get a contract signed before starting work? YOUR MISTAKE!. And, to add salt to the wound, you don't have a leg to stand on in court.
Depending on the dollar amount, you could take your client to small claims court to collect your fee. Unless you have a straightforward contract that is signed by both of you, odds are you wouldn't win. Not to mention there are court fees and costs associated with small claims court.
How to Collect: Refrain from getting into a name calling contest or hurling accusations and ultimatums. If you HAVE A SIGNED CONTRACT - Decide what you want to do. If you are willing to go to court, then notify the client in writing and allow them one more chance to pay. If they refuse, then off to small court you will go! If you DON'T HAVE A SIGNED CONTRACT: Ask them kindly once more via email or certified letter (return receipt) and ask for the client to remit payment by a certain date. Try to work out some sort of arrangement to get your fee, whether it is monthly installments etc.
Client Refuses to Pay, PERIOD: Say hello to the general ledger account, "BAD DEBT" and remember the experience. When money is involved, it is unlikely that you will make the same mistake twice. Wish the client well and ALWAYS maintain your professionalism. Let them know that you are writing the fee off as Bad Debt and let it go.
Next time, I bet you won't have to say "hello" to bad debt anymore!
Bad debt is not something anyone enjoys but believe me, it is listed as a financial statement item for a reason. Because it happens from time to time. A client may appear to be the nicest and most cordial of clients, but when it is time to pay, they are no where to be found. What can you do about it?
The Example: Let's say for example that you have a new client. This client would like you to perform Service "A". You complete Service "A" and bill the client. You wait for a few days (if you are emailing the billing) and nothing. You have decided to wait a couple of weeks. Then you send a reminder invoice thinking the client has either misplaced the original or never received it. Again, you wait awhile before you email them to ask for payment.
An email returns to you and they reply, "Yes, I received it and I didn't agree to this dollar amount. Revise the invoice to a lower price and I will pay it." Uh-oh...this isn't a good sign.
You decide to tell the client that the fee for Service "A" stands and kindly remit payment. No response.
Before you know it, the client is furious and feels you are ripping him or her off.
Okay, STOP.
The Basics: Before Service "A" is performed, did you get a contract together to spell out what the service is and what the fee shall be? Did the client sign it? Okay, then you have a leg to stand on. You say you DIDN'T get a contract signed before starting work? YOUR MISTAKE!. And, to add salt to the wound, you don't have a leg to stand on in court.
Depending on the dollar amount, you could take your client to small claims court to collect your fee. Unless you have a straightforward contract that is signed by both of you, odds are you wouldn't win. Not to mention there are court fees and costs associated with small claims court.
How to Collect: Refrain from getting into a name calling contest or hurling accusations and ultimatums. If you HAVE A SIGNED CONTRACT - Decide what you want to do. If you are willing to go to court, then notify the client in writing and allow them one more chance to pay. If they refuse, then off to small court you will go! If you DON'T HAVE A SIGNED CONTRACT: Ask them kindly once more via email or certified letter (return receipt) and ask for the client to remit payment by a certain date. Try to work out some sort of arrangement to get your fee, whether it is monthly installments etc.
Client Refuses to Pay, PERIOD: Say hello to the general ledger account, "BAD DEBT" and remember the experience. When money is involved, it is unlikely that you will make the same mistake twice. Wish the client well and ALWAYS maintain your professionalism. Let them know that you are writing the fee off as Bad Debt and let it go.
Next time, I bet you won't have to say "hello" to bad debt anymore!
The Example: Let's say for example that you have a new client. This client would like you to perform Service "A". You complete Service "A" and bill the client. You wait for a few days (if you are emailing the billing) and nothing. You have decided to wait a couple of weeks. Then you send a reminder invoice thinking the client has either misplaced the original or never received it. Again, you wait awhile before you email them to ask for payment.
An email returns to you and they reply, "Yes, I received it and I didn't agree to this dollar amount. Revise the invoice to a lower price and I will pay it." Uh-oh...this isn't a good sign.
You decide to tell the client that the fee for Service "A" stands and kindly remit payment. No response.
Before you know it, the client is furious and feels you are ripping him or her off.
Okay, STOP.
The Basics: Before Service "A" is performed, did you get a contract together to spell out what the service is and what the fee shall be? Did the client sign it? Okay, then you have a leg to stand on. You say you DIDN'T get a contract signed before starting work? YOUR MISTAKE!. And, to add salt to the wound, you don't have a leg to stand on in court.
Depending on the dollar amount, you could take your client to small claims court to collect your fee. Unless you have a straightforward contract that is signed by both of you, odds are you wouldn't win. Not to mention there are court fees and costs associated with small claims court.
How to Collect: Refrain from getting into a name calling contest or hurling accusations and ultimatums. If you HAVE A SIGNED CONTRACT - Decide what you want to do. If you are willing to go to court, then notify the client in writing and allow them one more chance to pay. If they refuse, then off to small court you will go! If you DON'T HAVE A SIGNED CONTRACT: Ask them kindly once more via email or certified letter (return receipt) and ask for the client to remit payment by a certain date. Try to work out some sort of arrangement to get your fee, whether it is monthly installments etc.
Client Refuses to Pay, PERIOD: Say hello to the general ledger account, "BAD DEBT" and remember the experience. When money is involved, it is unlikely that you will make the same mistake twice. Wish the client well and ALWAYS maintain your professionalism. Let them know that you are writing the fee off as Bad Debt and let it go.
Next time, I bet you won't have to say "hello" to bad debt anymore!
posted by zzzzzzzzzzz at
2:33 AM
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