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How to Deal With a Customer Who Won’t Pay

 

Do you have a customer who just refuses pay you?  It’s a pretty sad reality that there are quite a few peeps out there who will happily take advantage of the benefits your biz offers, but when it’s time to pay you, they’ll refuse to do so. It’s hurtful, annoying and stressful. Quite often these peeps will have some kind of an excuse, but the bottom line is you’re not getting paid.

Here are 4 steps to take to get your customers to pay you:

Step 1:  Get on the blower one last time

Phone your customer and have a chat about their unpaid invoice.  Perhaps they have an issue with your product or service that you weren’t aware of.  Perhaps they’re having a downturn in business and can’t afford to pay you.  Perhaps they just forgot or they’ve been overseas and have just got back.  Whatever their excuse, here are some ideas on what to talk about on the phone:

  • Scenario 1 – your customer forgot to pay you: Ask them to pay you by the end of the week, and then put a reminder for that date in your calendar to check they’ve paid.  If they don’t pay by the date you’ve agreed on, phone them straight away to follow up again.
  • Scenario 2 – your customer says they can’t afford to pay you:Tell them they need to commit to a payment plan at a weekly, fortnightly or monthly amount that you can live with and they can afford, and get them to agree to it.  Tell them you’ll send them an automatic payment or direct debit form to get their payment plan in place.
  • Scenario 3: your customer has an issue with your product or the work you did for them:  Talk to your customer and listen to their issues and make a note of them.  Ask for as much information you can about what went wrong in their eyes.  Thank your customer for talking to you about the prob, and tell them you’ll look over their details and you’ll get back to them within a certain timeframe (like within a day) about their issue.  This will give you time to cool off if you’re mad and to think about how you’ll respond.  How you respond is up to you and will depend on the issue and the amount of money involved, but as a general rule it’s best to try to come to some kind of compromise with the customer that you can both live with, as this will probably be less time consuming and expensive in the long run.  You need to keep in mind the power of “word of mouth” when dealing with these complaints, especially because of the damage people can do to a biz via social media and review websites.
  • Scenario 4: your customer won’t answer your calls:  Leave your customer a couple of friendly messages asking them to contact you ASAP and leave your phone number and email address so they can easily contact you back.
  • Scenario 5: your customer owes you a lot of money:  If your customer owes you a large chunk of change that they don’t have and can’t be paid off reasonably fast with a payment plan, it’s time to get more creative with how they can pay you.  Some options to talk about include them refinancing, getting a bank loan or overdraft, selling an asset and borrowing some money from a family member.

Step 2:  Send a letter of demand

If you still haven’t been paid, it’s time to get serious.  Send your customer a formal letter of demand that tells them how much they owe you and what will happen if they don’t pay you within a set timeframe.  

Create a Letter of Demand for only $9.99 today

If you want to write your own letter of demand make sure it includes:

  • How much your customer owes you, including any interest you’re charging on their overdue account
  • A copy of the unpaid invoice
  • A set timeframe to pay the invoice, such as 7 days
  • Details of how they can pay the invoice, such as your bank account number
  • Information about what will happen if they don’t pay your invoice within the set timeframe

Step 3:  Call in the debt collector

If the customer hasn’t disputed your invoice, you can get a debt collector on the job.  You can’t get a debt collector to chase up an unpaid invoice if the customer has disputed the invoice.  You can also report the debt to a credit reporting agency (agencies that sell info about people’s credit history) and in some situations you can sell the debt to a debt collector.  Talk to your preferred debt collector for more info about these options.

Step 4:  It’s time for legal action

If the customer has disputed your invoice, you can file a claim in either the Disputes Tribunal or court depending on how much mula is involved.

If your customer owes you $15,000 or less you can file a claim in the Disputes Tribunal (this amount can be raised to $20,000 if both parties agree).  The Disputes Tribunal is a cheap way to sort out a dispute as filing a claim costs $45 – $180 depending on how much $$ is involved, and you don’t need to worry about legal fees as there are no lawyers allowed.  Click on this linky link for some info on filing a claim in the Disputes Tribunal.

If your customer owes you more than $15,000 you will need to file a claim in court.  It’s best to get a lawyer involved at this point.  The first step is to file a statement of claim in either the District Court (for claims up to $200k) or the High Court (for claims over $200k).

Create a Letter of Demand for only $9.99 today

 

Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies. 

 

 

 

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Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.
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