Do you have trouble collecting money from clients that refuse to pay? You are not the only one. From late payments to being completely ghosted, small real estate businesses or Property Management companies face payment issues recurrently.
Besides meeting your financial obligations, tracking down payments wastes your valuable time. It takes your attention away from more crucial tasks. Additionally, it can cause cash-flow issues and harm your client relationships in the long run.
We are here to help you. The tips listed below will help you collect payments from your clients on time or earlier than intended.
Communication is important. If your client hesitates to pay you, and you’re not sure why the very first step is to have a non-confrontational talk with them. It’s good to contact them as soon as possible because collecting your debt becomes increasingly difficult as time passes.
Nonpayment might sometimes be a result of a misunderstanding. Investigate why the client is refusing to pay. Haven’t you been paid in full? Is it possible they’re accusing you of not doing a perfect job?
If the client can’t afford the amount, and you are only discovering this when it’s time for them to sign you a check, you may consider working out a fair payment plan. For instance, allowing them to make payments in installments is preferable to not being paid. You may be entitled to charge interest on costs, though, depending on your original arrangement with them.
When a client fails to pay you on time, consider following up twice or three times after the due date.
In the follow-up process, ensure you spell out the terms associated with late payment. You don’t want to sabotage your relationship with them. The imposition of late payment fees prompts most clients to pay on time.
The other side of the coin is rewarding customers who pay early with tiny reductions to show appreciation. The ‘early payment discount,’ often used, is a very effective strategy.
The reverse side is rewarding customers who pay early with small discounts to show appreciation. The ‘early payment discount’ is a very effective strategy. Else, you can employ any other reward to encourage your clients to pay without delay.
Late clients on their payments are a business person’s greatest nightmare. They put your business’ viability and integrity in jeopardy. However, if you remember the above pointers and know your rights as a business owner, you will be on your way to lowering the number of late payment issues you face in the future.
If the client is just making excuses or refusing to honor the contract for unlawful reasons, you might be forced to take legal action against them. Unfortunately, this will harm your business relationships, but it may be the only option to get your money back.
First, have your lawyer send a demand letter to the client. Usually, a demand letter shows an intention to take legal action against a person who doesn’t wish to honor their debt by a specific date.
If the demand letter fails to produce results, you can take your case to court. The client is given by the court a specified number of days — usually one month — to pay the amount. If they don’t clear the debt, a court date is set.
After the judgment has been awarded in your favor, the client is given another 30 days to make payment. If this timeframe expires and they haven’t paid, you can take different actions to fulfill your debt.
The court will dispatch a constable to seize the client’s belongings (commonly referred to as an attachment lien). Another option that the court may consider is wage garnishment. Any of these actions can be objected to by the client. However, if they do object, another court hearing will be scheduled, and the judge will rule on how to proceed.
You can contact a collection agency if the debt is too little to warrant court fees and the time that comes with it. In exchange for their services, the collection agency will usually cut the money recovered or only pay you a portion of the total amount outstanding. Although you won’t be able to recover the entire amount owed, the collection agency will essentially be lifting the load off your shoulders by doing all the “dirty work” of chasing the client. If you forward the debt to an agency, you must inform the courts that the arrears have been settled.
The post 3 Ways To Collect Money From Clients Who Won’t Pay appeared first on Entrepreneurship Life.